SECTION 3. SCOPE

.01 In general . This revenue procedure applies to a qualified taxpayer as defined in section 4.01 that pays qualified costs defined under section 4.07 in the course of performing a remodel-refresh project defined under section 4.03 on a qualified building defined under section 4.02.

.02 Exclusions . This revenue procedure does not apply:

(1) To excluded remodel-refresh costs defined under section 4.06;

(2) To de minimis costs defined under section 5.05(1);

(3) To remodel-refresh costs that, if capitalized, are not depreciated by the qualified taxpayer under § 168;

(4) To expenditures treated as qualified lessee construction allowances under § 110 and the accompanying regulations;

(5) If the qualified taxpayer made a partial disposition election under § 1.168(i)–8(d)(2), Prop. Reg. § 1.168(i)–

8(d)(2), section 6.33 of the Appendix of Rev. Proc. 2011–14, or section 6.33 of Rev. Proc. 2015–14 for any portion of a qualified building and the qualified taxpayer has not revoked the partial disposition election within the time and in the manner provided in section 5.02(4)(b)(ii), to qualified costs paid for that qualified building prior to the year of change (as defined in section 3.19 of Rev. Proc. 2015–13, 2015–5 I.R.B. 419, 429 (or its predecessor)) for the change in method of accounting to utilize the remodel-refresh safe harbor. See section 5.02(4)(c);

(6) If the qualified taxpayer recognized a gain or loss upon the disposition of a component of a qualified building under § 1.168(i)–1T or § 1.168(i)–8T, or in a taxable year beginning before January 1, 2012, and the qualified taxpayer (i) has not changed its method of accounting (including changes initiated by the IRS) under section 6.38(3)(a) or 6.40(3)(a) of Rev. Proc. 2015–14, 2015–5 I.R.B. 450 (or its predecessor), as applicable, for that qualified building (change in method of accounting to be in accord with § 1.168(i)–1(e)(2)(viii) or § 1.168(i)– 8(c)(4) (determination of asset disposed of)) on or before the first taxable year that the qualified taxpayer uses the remodelrefresh safe harbor, and (ii) has not taken the entire amount of the § 481(a) adjustment into account in computing the qualified taxpayer’s income for the year of change, to any qualified costs paid for that qualified building prior to the year of change (as defined in section 3.19 of Rev. Proc. 2015–13) for a change made by the qualified taxpayer or the IRS under section 6.38(3)(a) or 6.40(3)(a) of Rev. Proc. 2015–14, as applicable, for that qualified building. See section 5.02(5)(b) of this revenue procedure; or

(7) To any direct or allocable indirect costs of acquiring property described in § 1221(a) for resale, and therefore, subject to capitalization under §§ 263A(a)(1)(A) and (b)(2). See § 1.263A–3.

.03 Scope determined at entity level for consolidated groups and pass-through en- tities . The determination of whether a qualified taxpayer is within the scope of this revenue procedure is made separately with respect to each member of a consolidated group and with respect to each partnership, S corporation, or trust.