Leasehold improvements-lessor/lessee-related

[stalker001]

I have a client who operated a tanning salon (S-corporation). The salon was leasing a part of the building that the client owns and incurred sigfnificant leasehold improvements. At some point in 2010, he decides to leave the tanning business, sells the equipment. He also leases that part of the building to a unrelated party.
Now he wants to write off the undepreciated amount relating to the leasehold improvements.

I was following this discussion and came to conclusion that he needs to continue to depreciate those improvements because he owns the building and did not really "abandon" the improvements. Is anything wrong with analysis? Thank you so much!

http://www.taxalmanac.org/index.php/Discussion:Leasehold_improvements

[Davc]

I agree with your conclusion.

[JON]

Who paid for the leaeholds

if the tanning was in a business enity and paid for and left them and is filing a final return hwo do you not write them off... Unless the new rentor is paying the tanning salon. I am searching for you...

[stalker001]

Thank you for your responses

I was referred to this discussion. It seems suggest the leasehold improvements can be written off. I think the tanning salon paid for the impromevements. Thank you for your help!

http://www.taxresourcegroup.com/library/memo/1021.html