Retail Glitch Correction

The CARES Act is in the process of making a correction that many of us have been waiting for, a technical correction of the useful life treatment of qualified improvement property.  Assuming the bill passes in its current form and is signed by the President, the retail glitch will be fixed.

As a reminder, the retail glitch was an error that has kept restaurants and retailers from writing off the costs of interior renovations using 100% bonus depreciation. It is a tax overhaul error that industries have lobbied on extensively.

Under IRC 168(e)(3)(E) the CARES Act, if passed into law in its current form, will include leasehold improvements as 15-year property eligible for bonus depreciation for tax years beginning after December 31, 2018.

This fix will make leasehold improvement eligible for 100% bonus depreciation. Although many of you are looking to file your tax returns as soon as possible, this correction could significantly change your 2019 tax liability. It is expected that if you have already filed your return, you will have the option to amend your 2019 tax return to take the deduction for the change in the tax law.

If you have any additional questions, please do not hesitate to contact us.