IRS Safe Harbor For Retail and Restaurant

Industries

How can adoption of the

safe harbor benefit your

business?

Bonus Track: Tax

Depreciation

Legislative Update

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Effective Dates1 Percentage

Rates

9/11/2001 - 5/5/2003 30%

5/6/2003 - 12/31/2004 50%

1/1/2008 - 9/8/2010 50%

9/9/2010 - 12/31/2011 100%

1/1/2012 - 12/31/2017 50%

1/1/2018 - 12/31/2018 40%

1/1/2019 - 12/31/2019 30%

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Qualified Improvement Property

(QIP)

Qualified Leasehold

Improvement Property (QLHI)

Qualified Retail Improvement

Property (QRIP)

Qualified Restaurant Property

(QRP)

Applicable Dates Jan. 1, 2016 and onward Jan. 1, 2015 and onward Jan. 1, 2015 and onward Jan. 1, 2015 and onward

Important Notes

Any improvement to an interior

portion of a building that is non-

residential real property provided

the improvement is placed in

service after the date the building

was first placed in service.

Any improvement to an interior

portion of a nonresidential building

which is made under or pursuant to

a lease.

Any improvement to an interior

portion of a non-residential building,

which is open to the general public

and used in the trade or business of

selling tangible personal property to

the general public (i.e., retailer)

Any Section 1250 property that is a

building or improvement to a

building (new or existing structure)

where more than 50 percent of the

building’s square footage is

devoted to the preparation of, and

seating for, on-premises

consumption of prepared meals.

Non-qualifying

Improvements

Enlargement of building, elevators

or escalators, internal structural

framework of a building, structural

components that benefit a common

area.

Enlargement of building, elevators

or escalators, internal structural

framework of a building, structural

components that benefit a common

area.

Enlargement of building, elevators

or escalators, internal structural

framework of a building, structural

components that benefit a common

area.

N/A

3 Year Rule N/A Yes Yes N/A

Related Party

Rule N/A

Landlord and tenant cannot be

related parties. N/A N/A

Bonus

Depreciation

Eligible Yes Yes

Bonus eligible before January 1,

2016, if the property also meets the

definition of qualified leasehold

improvement property (QLHI).

Bonus eligible after December 31,

2015.

Bonus eligible before January 1,

2016 if the property also meets the

definition of qualified leasehold

improvement property (QLHI).

Bonus eligible after December 31,

2015 if the property also meets the

definition of qualified improvement

property (QIP).

Recovery Period 39 15 15 15

Tax Depr.

Convention and

Method

Mid-month convention/ straight

line method

Half-year convention/ straight line

method

Half-year convention/ straight line

method

Half-year convention/ straight line

method

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Technology1 2016 2017 2018 2019 2020 2021 2022 Future

Years

PV, Solar Water Heating, Solar Space

Heating/Cooling, Solar Process Heat 30% 30% 30% 30% 26% 22% 10% 10%

Hybrid Solar Lighting, Fuel Cells, Small Wind 30% N/A N/A N/A N/A N/A N/A N/A

Geothermal Heat Pumps, Microturbines,

Combine Heat and Power Systems 10% N/A N/A N/A N/A N/A N/A N/A

Geothermal Electric 10% 10% 10% 10% 10% 10% 10% 10%

Large Wind 30% 24% 18% 12% N/A N/A N/A N/A