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ADA compliance may qualify owner, tenant for tax breaks.

Business owners who alter property or facilities to comply with the Americans with Disabilities Act (ADA) may be able to fully deduct those expenses on their tax returns, according to Grant Thornton, a leading accounting and management consulting firm, based in Chicago.

ADA requires most companies that maintain commercial facilities or publicly accessed areas to remove all barriers that can obstruct disabled persons.

By July 26, the law will affect most businesses with 2 or more employees, including real estate companies, retailers, restaurants lodging establishments, banks and manufacturers, says Jerry Williford, tax partner with Grant Thornton's Houston office and a member of the firm's National Real Estate Committee.

Required alterations include widening doorways and aisles, remodeling restrooms, installing wheelchair ramps, adding raised or braille signs and lowering telephones, cash machines and other equipment to permit easier access by the disabled.

The Internal Revenue Code allows small companies (30 or fewer full-time employees or $1 million or less in gross receipts) to receive a maximum $5,000 annual tax credit to offset any ADA-related costs, says Williford.

In addition, since 1976, companies have been able to take an annual tax deduction, currently up to $15,000 per year, for expenses related to the removal of architectural and transportation barriers.

Although - the-Internal-Revenue-Service-(IRS) - regulations do not specify the treatment of costs in excess of $15,000, Williford says there is an argument in favor of a company deducting them as repairs. The IRS will recognize such deductions, if the following conditions are met:

* The expense must be ordinary in the industry

* It must be necessary

* It must not materially increase the property's value

* The expense does not substantially or materially extend the property's life

* If does not adapt the property to a different use

* It does not create a separate asset
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Title Annotation:Americans With Disabilities Act
Publication:Real Estate Weekly
Date:Aug 5, 1992
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