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IRS to Provide Guidance to Restaurants

Restaurants across Long Island should be on the lookout for IRS guidance regarding the complex tangible property regulations. The IRS recently announced, on December 23, 2014, that it has accepted a request for guidance under its Industry Issue Resolution (“IIR”) program regarding the capitalization rules as used by restaurants. The request seeks guidance on the application of the unit of property rules, refresh and remodeling expenses, and the rules for general maintenance and repair expenses.

The objective of the IIR program is to resolve business tax issues common to significant numbers of taxpayers through new and improved guidance. The tangible property regulations, which must be implemented for tax years beginning on or after January 1, 2014, are expected to affect every taxpayer with tangible property. Restaurants are clearly affected through the large amount of materials, supplies, equipment, and other tangible property that are held and used by them.

Resolution of issues reviewed in the IIR program is generally through IRS published guidance such as regulations, revenue rulings, revenue procedures, notices, or administrative guidance such as Internal Revenue Manual provisions. Guidance on recently selected and resolved issues can be found on the IRS website. 

Michael Torhan is a Senior Tax Manager in the Real Estate Services Group providing tax compliance and consulting services for businesses in a variety of industries including the real estate, hospitality, and financial services sectors.

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