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Tax Issues that Restaurants Need to Consider

The New Remodel/Refresh Safe Harbor for Retail Establishments and Restaurants included within Revenue Procedure 2015-56 is effective for tax years beginning after December 31, 2013. The revenue procedure provides certain taxpayers engaged in the trade or business of operating a retail establishment or restaurant with a safe harbor method for determining whether expenditures to remodel or refresh a qualified building are deductible or must be capitalized as improvements.

Under the new safe harbor method of accounting, a qualified taxpayer must treat 75% of qualified costs as deductible and must capitalize the remaining 25% of qualified costs as improvements.

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