IRS Chief Counsel - Bonus depreciation for casino projects 

January 14: The IRS today posted a “redacted” field advice memorandum* in which it addressed whether the taxpayer was entitled to bonus depreciation for various building projects that are part of a casino complex. 20140202F (release date January 10, 2014, and dated August 23, 2013)

The property at issue in the memo was a building that the taxpayer purchased and then renovated for a restaurant and food service area for the casino complex. Over a period of years, the taxpayer completed four separate construction projects, and the taxpayer and the IRS agreed to use the restaurant and food service project as representative of the other projects.

In general, the IRS memo concludes that the taxpayer was not entitled to bonus depreciation because:

  • The taxpayer must separately identify the properties associated with the project to determine which assets constitute “qualified property” (here, the taxpayer identified the properties through a cost segregation study).
  • The taxpayer has the burden of proof to show that properties are subject to bonus depreciation (here, it was concluded the taxpayer had not met its burden).
  • Thus, the IRS memo concludes that the taxpayer was not entitled to bonus deprecation as it has failed to demonstrate when costs were incurred for each property.

Read the field advice memo [PDF 156 KB]

*Field advice memo documents are prepared by IRS field attorneys in the Office of Chief Counsel, are reviewed by an Associate Office, and are subsequently issued to IRS field or service center employees. The memo cannot be used or cited as precedent.

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