Leasehold Improvements

[Kurly]

Tax Payer leases a new building (first time occupied), lease is for 5 years. the renter pays $138,000.00 for improvements to the interior of the building, which was just 4 walls, so that they could use it for a dance studio and rehearsal center.

Would the placed in service more than 3 years after the date the building was first placed in service requirement ,negate the improvements as Qualified leasehold improvement property?

Amortize over 5 years or 15 years?

Would it qualify for the 50% Special Depreciation?

If none of the above qualify, what do you suggest?

thanks

Kurly

[Koss]

Placed in Service Date?

When was the building built? How long has it been available for occupancy?

Any chance it was built more than three years ago?

BMK

[Kurly]

Leasehold Improv.

Built 2009 never occupied.Permit to build received in 2008. Occupancy permit issued June 2009

[Burke]

I am a little confused. Are "taxpayer" and "renter" one and the same? Who did the leasehold improvements? And was that info contained in the lease?

[Kurly]

Leasehold Improv.

Yes Tax Payer is the renter. Taxpayer paid for Improvements. He was required to pay for any improvements within the lease agreement. If lease is renewed after 5 years, 50% of the improvements will be returned to the renter.

K

[AJsTax]

First use of

the builiding negates special leasehold deprecaition rates. take 39 years on all improvements.