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October 15, 2001

STIMULUS PACKAGE: House Ways and Means Gives Seal of Approval

The House Ways and Means Committee approved an economic stimulus package today containing many provisions that could help the restaurant industry. The package included accelerated depreciation for equipment and for leasehold improvements, a two-year extension of the work opportunity tax credit (WOTC), and elimination of the corporate alternative minimum tax (AMT), among other items.

Representative Mark Foley (R-FL), sponsor of legislation on the business meal deduction and restaurant depreciation, had tried to offer amendments to include them in the package, but was asked to refrain because the provisions were perceived to benefit only specific industries.

The bill now goes to the full House of Representatives for approval and the Senate will debate their own version of a stimulus package. At this point, the differences between the bills will have to be reconciled before being sent to the President for final approval.

While many restaurants will benefit from accelerated equipment expensing and accelerated leasehold improvements, owner-occupied restaurant buildings have been excluded and placed at a competitive disadvantage. The Association will work with the Senate to include language to help level the playing field with regard to depreciation.

The provisions in the package included:

Accelerated depreciation--Allowing 30 percent of the cost of certain properties to be written-off in the first year, the remaining cost would be depreciated under the regular schedules. The provisions would apply to property deducted over 20 years or less, (except leasehold improvements). The effective date for this provision is for any property acquired on September 11, 2001 through the next 36 months.

Leasehold improvements--Allowing improvements made on leased property to be depreciated over 15 years rather than the current 39 year schedule. This would apply to any improvements made on or after September 11, 2001.

Full repeal of the Corporate Alternative Minimum Tax

Two-year extension of the WOTC – set to expire on December 31, 2001, this provision would be extended through December 31, 2003.

Source: NRA

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