As 2014 came to an end, restaurant businesses everywhere waited on several tax breaks that can be beneficial on their 2014 tax returns. On December 16, 2014, Congress finally approved the new bill that extended the “tax extenders” retroactive to January 1, 2014. Three days later, President Obama signed the “Tax Increase Prevention Act of 2014” that extends over 50 tax provisions that had expired at the end of 2013. Below are just some of the tax extenders that could provide tax relief on your 2014 tax return.

Bonus Depreciation
Bonus Depreciation allows taxpayers to deduct 50 percent of the cost of equipment acquired and placed in service during 2014. The other half gets deducted over several years using regular depreciation.  This is a good way for restaurants to expand their operations and invest in equipment and be able to deduct those expenditures right away.

Section 179 Expensing
Section 179 allows businesses to immediately deduct up to $500,000 in fixed asset additions made during the year rather than depreciating them overtime. This rule allows expensing for equipment, furniture, fixtures and certain leasehold improvements and restaurant buildings. Section 179 is subject to a dollar-for-dollar phase out on expenditures over $2 million in 2014.

Enhanced Charitable Deduction for Food Inventory Donation
The enhanced deduction for food donations allows businesses to reduce their taxable income by donating surplus of food to charitable organizations. This helps offset storing, preserving and transportation costs associated with food donation. Although this provision has been a “tax extender” for 2014, lawmakers are looking to make this provision permanent going forward.

Fifteen-Year Depreciation Schedule
This provision allows for qualified leasehold improvements and qualified restaurant buildings and improvements to be depreciated over 15-years straight line cost recovery rather than 39 years. Since this has been extended for 2014, restaurants may deduct their renovation and remodeling project expenses over a shorter 15-year depreciation schedule.

Tax credits and deductions change from year to year based on the economy. So a tax law extended for this year may not be extended again in the future. It is important for restaurant owners to stay current with tax laws in order to maximize its benefits. If you have any questions regarding the tax extenders, please contact Joel Sese at 312.670.7444. You can also visit orba.com to learn more about our Restaurant Group.