The American Jobs Creation Act of 2004 created a 15-year recovery period under the Modified Adjusted Cost Recovery System (MACRS) for qualified leasehold improvement property and qualified restaurant property placed in service after October 22, 2004, and before January 1, 2006. Taxpayers using this recovery period were required to use the straight-line method and the half-year convention (unless the mid-quarter convention applies). The Tax Relief and Health Care Act of 2006 extended these provisions to property placed in service prior to January 1, 2008.

The Emergency Economic Stabilization Act of 2008 (2008 Stabilization Act) generally extends the placed in service date through January 1, 2010, and provides affected taxpayers an additional two years to take advantage of the reduced recovery period for restaurant and leasehold improvement property. Fifteen-year treatment is also extended to certain new construction, as well as to certain improvements to retail space placed in service after December 31, 2008, and before January 1, 2010.

If your business reported restaurant, retail or leasehold improvement property in prior years, you may want to note this favorable tax development when planning to acquire qualified restaurant, retail or leasehold property. The specific requirements for qualification of the improvement property for 15-year treatment are somewhat complex, and we would be happy to assist you in ensuring that your tax benefits from use of such property are maximized.