Hi Larry,
Do you get many salons that utilize Section 179 deductions for leasehold improvements? Thanks, Ben
Ben, We use §179 whenever it is to the client's advantage. The problem with leasehold improvements is that, by statute, it does not qualify for §179. Only personal property qualifies. Therefore, with the exception of the 50% up front write off provided by the 2008 Stimulus Bill, leasehold improvements are 39 year property and must be taken over that period of time regardless of the lease term.
One planning technique that we use is what is referred to as Component Depreciation. In essence, we analyze the leasehold improvement to determine if there is any part of the improvement that would qualify as personal property and therefore be subject to §179. We are usually pretty successful in finding that most salons and spas that do leasehold improvements are missing this tax planning opportunity and overpaying their tax.
Let me know if I can be of further assistance.
Larry Kopsa CPA
Do you get many salons that utilize Section 179 deductions for leasehold improvements? Thanks, Ben
Ben, We use §179 whenever it is to the client's advantage. The problem with leasehold improvements is that, by statute, it does not qualify for §179. Only personal property qualifies. Therefore, with the exception of the 50% up front write off provided by the 2008 Stimulus Bill, leasehold improvements are 39 year property and must be taken over that period of time regardless of the lease term.
One planning technique that we use is what is referred to as Component Depreciation. In essence, we analyze the leasehold improvement to determine if there is any part of the improvement that would qualify as personal property and therefore be subject to §179. We are usually pretty successful in finding that most salons and spas that do leasehold improvements are missing this tax planning opportunity and overpaying their tax.
Let me know if I can be of further assistance.
Larry Kopsa CPA
