The tax extenders bill in Congress has passed in the House and Senate, and President Obama is expected to sign the bill.
Formally known as the Tax Increase Prevention Act of 2014 (HR 5771), key provisions in the bill particularly impacting construction and real estate businesses include the extension of 50% bonus depreciation and qualified leasehold improvements for the 2014 tax year.
Under HR 5771, qualified leasehold improvement property will continue to be eligible for 50% bonus depreciation. This property is defined in IRC 168(k)(3) as new improvements to an interior portion of a building that qualifies as nonresidential real property. In addition, this treatment is available as long as the improvements are made by the lessor more than three years after the date the building was placed in service.
Notable exceptions to qualified leasehold improvement treatment include: elevators, escalators, structural components benefiting a common area, or the internal structural framework of the building.
To take full of advantage of the new legislation, please consult a Schneider Downs tax advisor.
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