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A
new smallwares accounting method has been released by IRS. The
procedure greatly simplifies recordkeeping and allows restaurant
and tavern owners to change accounting methods and expense the
cost of replacement dishware, glassware and other items that
previously had to be depreciated. The smallwares method of
accounting allows restaurants and taverns to deduct the cost of
these replacement items in the year purchased.
Generally
smallwares consists of the following categories: glassware,
flatware, dinnerware, pots and pans, table top items, bar
supplies, food preparation utensils and tools, storage supplies,
service items and small appliances costing $500 or less.
Smallwares consist of the
following ten categories of items:
(1) Glassware and paper or
plastic cups;
(2) Flatware (silverware) and
plastic utensils;
(3) Dinnerware (dishes) and
paper or plastic plates;
(4) Pots and Pans;
(5) Table Top Items;
(6) Bar Supplies;
(7) Food Preparation Utensils
and Tools;
(8) Storage Supplies;
(9) Service Items; and
(10) Small Appliances that
cost $500 or less.
Categories 5 through 10
include, but are not limited to, the items listed below:
(5) TABLE TOP ITEMS include items placed on customer
tables, such as salt and pepper shakers, cheese shakers, ash
trays, teapots, cruets, sugar caddies, tablecloths, napkins, menu
holders, menus, vases, candles, and candleholders.
(6) BAR SUPPLIES include mixing glasses, bar strainers,
cutting boards, liquor pourers, jiggers, corkscrews, bottle
openers, storage bottles, wine and champagne stoppers, bar
caddies, wine coolers, decanters, salt and sugar glass rimmers,
slow pourers, and malt shakers.
(7) FOOD PREPARATION UTENSILS AND TOOLS include hand
utensils (spoons, spatulas, wisks, peelers, etc.), pastry and
grill brushes, skimmers, knives, kitchen shears, cutting boards,
strainers, colanders, shakers, dippers, measuring cups and spoons,
thermometers, gloves, goggles, timers, scales, shaker baskets,
salad spinners, lettuce crispers, sifters, pastry bags and tubes,
mixing bowls, pot holders, kitchen towels, cheesecloths, and
kitchen staff uniforms.
(8) STORAGE SUPPLIES include food containers, flatware
sorters, dish containers, and spice racks.
(9) SERVICE ITEMS include pepper mills, cheese graters,
bread boards, pitchers, squeeze dispensers, coffee pots, napkin
receptacles, flatware, plate, glass, and mug storage racks, wait
staff and self-serve trays, soup and salad bar trays and
containers, bus tubs, tray carts, booster seats, and wait staff
uniforms.
(10) SMALL APPLIANCES include iced tea dispensers, can
openers, condiment pumps, individual food warmers, heat lamps,
slicers, glass washers, electric knife sharpeners, blenders,
juicers, and nonindustrial mixers. Small appliances do not include
appliances that cost in excess of $500.
For
purposes of this revenue procedure, smallwares do not include
office supplies, general purpose cleaning supplies, or general
purpose maintenance tools. In addition, smallwares do not include
extraordinary items, such as collectibles or other items of
significant artistic or intrinsic value, items that are accounted
for separately for tax or financial purposes, or items that
generally are listed as scheduled property for insurance purposes.
Examples of extraordinary items are flatware or dinnerware made of
precious metals, and antique vases used for centerpiece or display
purposes.
The
smallwares accounting method can only be used by persons engaged
in the business of operating a restaurant or tavern that prepares
food and beverages. It isn’t available for new business start-up
purchases of smallwares and does not apply to items purchased and
stored at a warehouse or location other than the restaurant or
tavern where the items are used.
Use
Form 3115, Application for
Change in Accounting Method to elect this method. You may download
Form 3115 and Revenue
Procedure 2002-12, 2002-3 IRB 374 by clicking on the links.
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