Industry News | April 2, 2011

Senate, House Bill Propose Tax Write Offs for Restaurant Innovations

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The National Restaurant Association (NRA) applauded Senators Kent Conrad (D-N.D.) and John Cornyn (R-Texas) and Representatives Jim Gerlach (R-Pa.) and Richard Neal (D-Mass.), who week introduced bipartisan bills to make permanent a 15-year tax depreciation schedule for restaurant improvements and new construction, leasehold improvements, and retail improvements.

Under S. 687 and H.R. 1265, restaurateurs, their landlords, and other commercial-property owners could write off the cost of improvements to property, as well as the cost of new construction for restaurants, over 15 years rather than 39. The current 15-year schedule for these investments is set to expire at the end of 2011.

"We applaud Senators Conrad and Cornyn, and Congressmen Gerlach and Neal for supporting measures to create tax fairness and boost the economy," says Scott DeFife, NRA executive vice president, policy and government affairs. "This measure recognizes the realities of how often restaurants must renovate and would provide much-needed cash flow to help small businesses reinvest in their operations."

Restaurants serve more than 130 million guests a day at nearly one million establishments across the U.S., absorbing a high level of daily wear and tear from guests and employees. NRA research shows that restaurants renovate every six to eight years, on average. The 39-year depreciation schedule does not reflect economic realities, DeFife says.

The measure would also help create jobs across the economy. Every $1 spent in construction generates an extra $2.38 billion in spending in the rest of the economy. Restaurants spent more than $6.2 billion on construction of new restaurant buildings in 2009, creating 174,000 jobs in the economy.

The quicker depreciation schedules would apply to new restaurant construction as well as investments in property such as interior walls, wiring, partitions, plumbing, and energy-efficient heating and cooling systems in restaurants, offices, and other commercial space. 

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