This article titled Tax Break for Leasehold Improvements gives some more definition to an item we covered briefly in class and discusses a new tax incentive for businesses to perform leasehold improvements. The article gives a good example to help explain how the tax break works.

The new rules allow 30 percent of the cost of leasehold improvements made to commercial real estate to be deducted in the first year. In addition to this bonus depreciation, taxpayers can deduct regular depreciation on the improvements. Either the lessor or the lessee may make the improvements and take advantage of the tax benefits.