5 Extended Tax Breaks that Benefits Restaurants
On Friday, President Barack Obama signed the Tax Increase Prevention Act of 2014 into law – which includes several tax breaks that had expired at the end of 2013. Specific tax breaks that were extended and are now available to claim for your 2014 return include:
- Bonus Depreciation – The 50 percent deduction on the cost of qualifying fixed asset purchases has been extended to eligible assets placed in service by Dec. 31, 2014. This is a date-driven benefit and not a tax-year specific benefit that is based on the date you place the assets into service. Qualifying assets include most furniture, fixtures and equipment, along with land improvements and certain types of building and leasehold improvements. You must be the first taxpayer to place the asset into service for it to qualify for bonus depreciation.
- Code Sec. 179 – Section 179 rules, which allow businesses to immediately deduct the cost of certain qualified assets, have been extended through the 2014 tax year and restored to 2013 levels. The dollar limit is set at $500,000. Fixed assets that qualify for Section 179 include most furniture, fixtures and equipment (new or used), as well as certain types of leasehold improvements and restaurant buildings.
- Qualified Restaurant Property and Qualified Leasehold Improvements – Typically, long-life restaurant leasehold improvements and building assets use a 39-year depreciable life. In recent years, the tax code has allowed a more beneficial 15-year life for assets meeting the definition of qualified restaurant property and qualified Leasehold improvements. The 15-year life had expired at the end of 2013, but it has been extended to include qualifying assets placed in service by Dec. 31, 2014.
- Work Opportunity Tax Credit – This tax credit is for eligible employers who hire military veterans, ex-felons and other specific classes of workers. The credit has been extended to include any qualifying employees that begin work before Jan. 1, 2015.
- Empowerment Zone Tax Credit – Restaurants that operate inside of Department of Housing and Urban Development designated Empowerment Zones that have employees that also live inside of a zone are eligible for a tax credit of up to 20 percent of each qualifying employee’s annual wages up to $15,000 (max credit per employee of $3,000 per year). To help determine whether your restaurant location is included in an empowerment zone, click here.
If you have questions about the Tax Increase Prevention Act of 2014 or want more information on what tax breaks will be available to you, please contact a member of the BDO tax team.