March 27, 2020

CARES Act fixes tax depreciation schedule mistake

One of the benefits the new coronavirus relief bill offers restaurants is a temporary fix for a problem the National Restaurant has been working to rectify since the Tax Cuts and Jobs Act of 2017 was enacted.

Back then, due to an error, the 15-year depreciation on restaurant improvements, known as Qualified Improvement Property, was inadvertently left out and the code reverted to an older schedule of 39 years. The Association’s advocacy and grassroots teams have helped build broad bipartisan support to get the language corrected as intended.

Those efforts got a big boost from the passage of the Coronavirus Aid, Relief and Economic Security Act (CARES) Act. The bill allows you to immediately write off any costs of improvements to your facilities rather than depreciate them over 39 years. It also allows you to amend your prior year’s tax return, potentially giving you access to additional cash flow.