Title: 
Headings: 
SECTION
 
1.
 
PURPOSE
 

SECTION
 
2.
 
BACKGROUND
 

SECTION
 
3.
 
SCOPE
 

.02
 
Exclusions.
  
This
 
revenue
 
procedure
 
does
 
not
 
apply:
   

.03
 
Scope
 
determined
 
at
 
entity
 
level
 
for
 
consolidated
 
groups
 
and
 
pass-through
 

SECTION
 
4.
 
DEFINITIONS
 

The
 
following
 
definitions
 
apply
 
solely
 
for
 
the
 
purposes
 
of
 
this
 
revenue
 
procedure:
 

SECTION
 
5.
 
REMODEL-REFRESH
 
SAFE
 
HARBOR
 
METHOD
 
OF
 
ACCOUNTING
 

         
(ii)
 
Time
 
and
 
manner
 
of
 
revoking
 
prior
 
year’s
 
partial
 
disposition
 
election.
  
If,
 

      
(c)
 
Qualified
 
taxpayer
 
does
 
not
 
revoke
 
the
 
partial
 
disposition
 
election.
  
If,
 

(ii)
 
Original
 
qualified
 
buildings
 
(including
 
their
 
structural
 
components).
  
A
 

.04
 
Treatment
 
of
 
excluded
 
remodel-refresh
 
costs.
  
Excluded
 
remodel-refresh
 


(1)
 
Treatment
 
of
 
amounts
 
eligible
 
for
 
safe
 
harbor
 
for
 
small
 
taxpayers
 
under
 

SECTION
 
6.
 
EXAMPLES
  

SECTION
 
7.
 
CHANGE
 
IN
 
METHOD
 
OF
 
ACCOUNTING
  

.02
 
Automatic
 
change.
   


 
Description
 
of
 
change.
   

   
(5)
 
Reduced
 
filing
 
requirement
 
for
 
qualified
 
small
 
taxpayers.
  
A
 
qualified
 
small
 

   
(7)
 
Designated
 
automatic
 
accounting
 
method
 
change
 
number.
  
The
 
designated
 


(a)
 
Reduced
 
filing
 
requirement
 
for
 
qualified
 
small
 
taxpayers.
  
A
 
qualified
 

   
(7)
 
Designated
 
automatic
 
accounting
 
method
 
change
 
number.
  
The
 
designated
 

SECTION
 
8.
 
EFFECT
 
ON
 
OTHER
 
DOCUMENTS
  

SECTION
 
9.
 
EFFECTIVE
 
DATE
 

SECTION
 
10.
 
DRAFTING
 
INFORMATION
 

Appendix
 
A
 

Documentation
 
Standards
 

Example
 
Schedule
 
of
 
Qualified
 
Costs
 
Subject
 
to
 
Remodel-Refresh
 
Safe
 
Harbor
 

 
Change
 
Between
 
Beginning
 
of
 
Year
 
and
 
End
 
of
 
Year
 
Applicable
 
Financial
 
Statement
 
("AFS")
 
Fixed
 
Assets
 

AFS
 
Additions
 
Converted
 
to
 
Capitalized
 
Cost
 
Additions
 
for
 
Tax:
 

Qualified
 
Costs
 
Subject
 
to
 
Safe
 
Harbor:
 

Qualified
 
Costs
 
Subject
 
to
 
Safe
 
Harbor:
 
$
                
XXX


Content: Generally,
 
a
 
retail
 
or
 
restaurant
 
taxpayer
 
undertakes
 
a
 
remodel-refresh
 
project
 
to
 
remain
 
competitive
 
and
 
to
 
improve
 
the
 
customer
 
experience. These
 
projects
 
typically
 
involve
 
a
 
planned
 
undertaking
 
to
 
alter
 
the
 
physical
 
appearance
 
and
 
layout
 
of
 
the
 
building
 
to
 
maintain
 
a
 
contemporary
 
and
 
attractive
 
environment,
 
to
 
more
 
efficiently
 
locate
 
different
 
functions
 
and
 
products,
 
to
 
conform
 
to
 
current
 
industry
 
standards
 
and
 
practices,
 
to
 
standardize
 
the
 
customer
 
experience,
 
to
 
offer
 
the
 
most
 
relevant
 
goods,
 
food,
 
or
 
beverages,
 
and
 
to
 
address
 
changes
 
in
 
demographics
 
by
 
changing
 
offerings
 
and
 
their
 
presentation. Typically,
 
taxpayers
 
also
 
perform
 
routine
 
repairs
 
and
 
maintenance
 
during
 
a
 
remodel-refresh
 
project. .02
 
Section
 
162
 
generally
 
allows
 
a
 
deduction
 
for
 
all
 
the
 
ordinary
 
and
 
necessary
 
expenses
 
paid
 
or
 
incurred
 
during
 
the
 
taxable
 
year
 
in
 
carrying
 
on
 
any
 
trade
 
or
 
business,
 
including
 
the
 
costs
 
of
 
repairs
 
and
 
maintenance. Section
 
263(a)
 
generally
 
requires
 
the
 
capitalization
 
of
 
amounts
 
paid
 
to
 
acquire,
 
produce,
 
or
 
improve
 
tangible
 
property. .03
 
Section
 
1.162-4
 
allows
 
taxpayers
 
to
 
deduct
 
amounts
 
paid
 
for
 
repairs
 
and
 
maintenance
 
of
 
tangible
 
property
 
if
 
the
 
amounts
 
are
 
not
 
otherwise
 
required
 
to
 
be
 
capitalized. Section
 
1.263(a)-3
 
generally
 
requires
 
taxpayers
 
to
 
capitalize
 
amounts
 
paid
 
to
 
improve
 
a
 
unit
 
of
 
property. Section
 
1.263(a)-3(d)
 
defines
 
improvements
 
as
 
amounts
 
paid
 
that
 
are
 
for
 
a
 
betterment
 
to
 
a
 
unit
 
of
 
property,
 
that
 
restore
 
a
 
unit
 
of
 
property,
 
or
 
that
 
adapt
 
a
 
unit
 
of
 
property
 
to
 
a
 
new
 
or
 
different
 
use. Sections
 
1.263(a)-3(j),
 
(k),
 
and
 
(l)
 
provide
 
detailed
 
criteria
 
for
 
determining
 
whether
 
amounts
 
fall
 
into
 
any
 
of
 
these
 

 
categories. Section
 
1.263(a)-3(e)(2)
 
provides
 
for
 
the
 
application
 
of
 
these
 
criteria
 
to
 
the
 
building
 
unit
 
of
 
property
 
by
 
applying
 
the
 
criteria
 
separately
 
to
 
the
 
building
 
structure
 
and
 
specifically
 
designated
 
building
 
systems.