Federal Tax Alert: IRS Takes an “Open for Business” Approach Regarding When a Retail Store is Placed in Service

When can a retailer start to claim tax depreciation on a new store? The IRS and a U.S. District Court are at odds. The IRS recently declared that a retail building must be “open for business” to be considered in service. This is a departure from a U.S. District Court case, Stine, LL v. United States, No. 2:13-03224 (W.D. LA 2015), which ruled that buildings were placed in service when the buildings were in a state of readiness and available to perform their function of housing shelves, racks, merchandise and equipment.

This announcement by the IRS is important because assets are not eligible to be depreciated until they are officially placed in service. The IRS is putting retailers on notice that it will continue to assert that a retail building must be “open for business” to be considered placed in service. 

Click here to read the full alert for more information on the IRS ruling and its “open for business” approach.

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