Tag Archive for safe harbor

IRS Releases Retail & Restaurant Safe Harbor Related to Tangible Property Regulations

On November 20, 2015, the IRS released Revenue Procedure 2015-56, providing certain “qualified tax payers” engaged in the trade or business of operating a retail establishment or a restaurant a safe harbor accounting method for costs incurred related to remodeling and refreshing of their “qualified buildings.” “Qualified taxpayers” include those conducting activities within NAICS codes 44 or 45, but specifically exclude motor vehicle dealers and gas stations, among others.

KBKG Insight: The Tangible Property Regulations introduced the concept of “Unit of Property” and “building systems” along with the requirement to analyze capital expenditures related to a betterment, adaptation, or restoration of the system rather than the entire building as a Unit of Property. Retailers and restaurateurs have argued that refreshing type activities often require work to be performed on the building systems Read more

The Service Issues New Administrative Authority Governing Tangible Property Regulations Compliance

On November 20, 2015, the Internal Revenue Service (hereinafter the “Service”) issued new administrative authority governing the Tangible Property Regulations (hereinafter “TPR”) in connection to the safe harbor rules for the retail and restaurant industries. More specifically, the newly released Revenue Procedure 2015-56 (hereinafter “Rev. Proc. 2015-56) provides a safe harbor method of accounting for taxpayers engaged in the trade or business of operating either a retail establishment or a restaurant for purposes of determining whether expenditures paid or incurred to remodel or refresh a qualified building are:

• Deductible pursuant to I.R.C. § 162(a);

• Requires capitalization treatment as an improvement pursuant to I.R.C. § 263(a); or Read more