179 Deduction on LH Improvements purchased form another

Client bought a restaurant.

He is telling me he should be able to take 179 deduction on a LH improvement that was done 5 years ago by the previous owner.

He argues that he is "placing it into service" for the first time, as far as he is concerned.

Is there some tax law or publication reference to this I can show him to where he can't do that?

(he can't, right?)

How much did he pay for that improvement, specifically? Show me where it was broken out on the HUD-1 settlement statement or in the contract.

But what I would recommend would be a cost segregation study, if the building cost is high enough to make it worth it (at least a few hundred thousand dollars or more).

It really depends.

Is the asset leased to his operating company? If so, probably a no go on 179 due to the noncorporate lessor rules.

Is it 1245 or 1250? If 1245, should be good to go on bonus or 179. If it is 1250, it is plausible to argue the non-QIP Qualified Real Property could qualify for 179. I don't think much of the argument and would suggest disclosing on 8275 if you go down that road. OTOH, if it is QIP, that's a no. There was a technical correction in the CARES Act that clarified that QIP only include improvements made by the taxpayer.

Wasn’t there a category “qualified restaurant property” pre -TCJA that would have allowed 179 expensing?

The TCJA changes applied based on placed-in-service date.