The changes will cut compliance and auditing costs, reduce confusion and streamline the process for restaurants and retailers that undertake refresh-remodel projects. Restaurants typically renovate every six to eight years. Up until now, restaurateurs have had to conduct extensive factual analysis to try to understand whether refresh-remodel expenditures are treated as repairs, maintenance or an improvement of taxpayer property. The process has been extraordinarily complex, often requiring separate legal analyses for different building components and different building systems. The new repair regulations could significantly cut costs for restaurant companies that remodel multiple stores a year. The NRA was instrumental in getting the IRS to examine the rules as part of the agency's "Industry Issue Resolution" process and NRA and its members were major players in IIR discussions for the past several years.
The new rule is effective for the tax year 2014 and beyond. The 51-page revenue procedure includes details on how restaurants can opt into the new safe-harbor method. IRS Rev. Proc. 2015-56 http://1.usa.gov/1Ti8iwX
If you have questions, please consult your tax advisor or call the LRA at (504) 454-2277 to be connected with a consultant at Bourgeois Bennett.