Kent Conrad: “I rise today, joined again by my colleague Mr. Nickles and many others, to introduce important legislation to provide a…”

“I rise today, joined again by my colleague Mr. Nickles and many others, to introduce important legislation to provide a 10-year depreciation life for leasehold improvements. Leasehold improvements are the alterations to leased space made by a building owner as part of the lease agreement with a tenant. This is a common sense move that will help bring economic development to cities and towns around the country that want to revitalize their business districts. It will allow owners of commercial property to remodel their buildings to better meet the business needs of their communities--whether for new computer ports and data lines for high-tech entrepreneurs, or better lighting and sales space for retailers. In actual commercial use, leasehold improvements typically last as long as the lease--an average of 5 to 10 years. However, the Internal Revenue Code requires leasehold improvements to be depreciated over 39 years--the life of the building itself. Economically, this makes no sense. The owner receives taxable income over the life of the lease, yet can only recover the costs of the improvements associated with that lease over 39 years--a rate nearly four times slower. This preposterous mismatch of income and expenses causes the owner to incur an artificially high tax cost on these improvements.”