Specialty Tax Tips for Restaurant Owners

If you are a restaurant owner and you are not taking advantage of specialty tax benefits – you should be. That’s because you may not know that in addition to manufacturer discounts and state and local rebates, there are several federal tax incentives. These come via cost segregation studies, 179D energy tax incentives, bonus depreciation, and disposition.

Specialty Tax Tips: Three Strategies for Restaurant Owners

How Can a Cost Segregation Study Help?

A cost segregation study can carve out certain qualifying portions of your building into 5, 7, and 15 year lives. These lives are normally buried in 39-year categories. Also, you’ll have a permanent 15-year recovery period for qualified leasehold improvements, restaurant, and retail property.

In order for your restaurant to qualify for the 15-year recovery period, the building must have been placed in service after January 1, 2009.

However, from October 23, 2004 – December 31, 2008, the full 15-year recovery period could only be applied to improvements. Without qualifying for the 15-year recovery period, these types of property would be depreciated over 39-years.

*It’s important to note that technical corrections to the Act are pending due to the omission of including qualified improvement property in the description of qualified property under the bonus depreciation provisions for assets placed in service from September 28, 2017. Updates to follow. Please refer to the IRS in the meantime.

*Additional qualifying rules apply depending on placed-in-service dates for the 15-year straight line, leasehold improvements, and option for claiming bonus depreciation.

How Can 179D Energy Incentives Help?

If you have new lighting installed at your restaurant, either through relighting or new construction, you have the opportunity for a federal tax deduction of up to $0.60 per square foot.

The full 179D EPAct certification calculates the tax deduction achieved from the installation of energy-efficient lighting, HVAC, and building envelope ranging between $0.60/sq. ft. and $1.80/sq. ft. In order to qualify for these deductions, you need to have sufficient energy savings. Those savings also have to be certified by tax experts at Engineered Tax Services.

Disposition of Assets

If you retire or remove assets from your company books, Engineered Tax Services allows you to calculate the value of these retired assets. The tax professionals will then provide all of the necessary documentation needed to claim these tax deductions.

With a unique blend of each of these services, you can take full advantage of these available tax strategies. Your results can be significant when combined with the local and utility benefits. However, it is important to remember that the age of the property and assets, size, and complexity affect the results. For more information or a complimentary consultation for your restaurant, please call (800) 236-6519.


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