Reclassification of Assets and Accelerated Depreciation

By Marky Moore Founder, Capital Review Group | May 20, 2012

An East Coast hotel had some choices to make. The owners of the hotel saw it growing and prospering and the ability to funnel cash back into the hotel as well as generate some real income was there, but there was also a good friend knocking at the proverbial door: the IRS. The IRS, of course, wanted their piece of the success and the hotel and its owners wanted to share, just not the amount that the IRS was asking for.

Challenges

  • Continuing to provide the best rooms and amenities in their segment of the hotel market.

  • Eliminating tax burden and ensuring the short-term and long-term growth of the hotel and the personal portfolios of the owners.

  • Utilizing tax opportunities through the assets that are currently owned without having to spend a huge part of excess cash on additional assets.

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Coming up in December 2018...

Hotel Law: New Administration - New Policies

In a business as large as a hotel and in a field as broad as the law, there are innumerable legal issues which affect every area of a hotel's operation. For a hotel, the primary legal focus includes their restaurant, bar, meeting, convention and spa areas of their business, as well as employee relations. Hotels are also expected to protect their guests from criminal harm and to ensure the confidentiality of their personal identity information. These are a few of the daily legal matters hotels are concerned with, but on a national scale, there are also a number of pressing issues that the industry at large must address. For example, with a new presidential administration, there could be new policies on minimum wage and overtime rules, and a revised standard for determining joint employer status. There could also be legal issues surrounding new immigration policies like the H-2B guest-worker program (used by some hotels and resorts for seasonal staffing), as well as the uncertain legal status of some employees who fall under the DACA program. There are also major legal implications surrounding the online gaming industry. With the growing popularity of internet gambling and daily fantasy sports betting, more traditional resort casinos are also seeking the legal right to offer online gambling. Finally, the legal status of home-sharing companies like Airbnb continues to make news. Local jurisdictions are still trying to determine how to regulate the short-term apartment rental market, and the outcome will have consequences for the hotel industry. The December issue of Hotel Business Review will examine these and other critical issues pertaining to hotel law and how some companies are adapting to them.