Accuracy of Hotel Feasibility Study Projections

Hotel feasibility studies are critical in the determination of hotel construction, sales and refinancing. Discrepancies have been reported between forecasted results and actual operating results. The author, with funding provided by the Hilton corporation, examines whether such studies under- state or overstate occupancy, average rate, and net income

Property Exchange Rules Offer Tax Opportunities for Hotel Owners

One strategy often overlooked by hospitality owners in developing cost-saving strategies is the use of like-kind exchanges to acquire property. The author reviews some alternative methods of like-kind exchanges, which may not only provide new business opportunities for the hospitality owner, but lucrative tax benefits as well

Using Tax Incentives Reduces Construction Costs

Rehabilitation tax credits can save developers a significant amount of money. The author discusses the tests used to lower overall tax liability by renovating older structures

Planning Buy-Sell Agreements In The Hospitality Industry

In the article - Planning Buy-Sell Agreements In The Hospitality Industry - by John M. Tarras, Assistant Professor, School of Hotel, Restaurant and Institutional Management at Michigan State University, the author initially observes: “The vast majority of hospitality firms (restaurants, hotels, etc.) would be considered closely-held corporations. As such, they have unique planning problems compared to large, publicly-traded hospitality firms. One area of special concern to the closely-held hospitality firm is the planning and adoption of a buy-sell agreement.” The above thesis statement outlines the heart of the article; the buy-sell agreement in regard to smaller [closely held, as Tarras calls them] corporations. The theory is narrow and pro-active, spanning the gap between personal-to-corporate stock manipulations. “The primary purpose of a buy-sell agreement is to contribute to the orderly transfer of a shareholder\u27s stock in a hospitality firm upon some future incident [typically retirement, withdrawal of a shareholder, disability, or death], as Tarras defines the concept. “The hospitality firm or the other shareholders would be committed to purchase the departing shareholder\u27s stock at an agreed upon price and method, and to ensure that ample cash will be obtainable for such an impending sale. The buy-sell agreement provides a market for the shareholder or the shareholder\u27s estate for the sale of otherwise illiquid stock,” the author further provides as canons of buy-sell agreements. In defining the buy-sell agreement with restrictive clauses, Tarras demonstrates, “…many closely-held hospitality firms desire to limit ownership to those individuals, either family or principal corporate employees, who are essential to the well-being of the firm.” Tarras says, another element of the buy-sell agreement is to furnish the departing shareholder with liquidity. “…there typically is some form of cash down payment with the remainder denoted by an interest-bearing promissory note [usually 5 to 15 years],” he informs. “The departing shareholders may require that the hospitality firm pledge the assets of the firm and that the remaining shareholders personally guarantee the promissory note.” “…the most frequent reason for establishing buy-sell agreements is for estate planning purposes,” Tarras says. There are tax advantages and liabilities for both the seller and buyer of stock via the buy-sell agreement, and the author enumerates many of these. One, big advantage of the buy-sell agreement is that it provides for the running of the company with a minimum of disruption through the stock-cash transition process, Tarras offers

IRS Looks Closely at Independent Contractors

The IRS is using various tools to attack the status of various so-called \u27outside consultants being used by hospitality firms. This article will provide some planning tips so that the hospitality firm can minimize its chances of having workers reclassified as employees

The IRS Collection Division: Contacts and Settlements

In his study -The IRS Collection Division: Contacts and Settlements - by John M. Tarras, Assistant Professor School of Hotel, Restaurant and Institutional Management, Michigan State University, Tarras initially states: “The collection division of the internal revenue service is often the point of contact for many hospitality businesses. The author describes how the division operates, what the hospitality firm can expect when contacted by it, and what types of strategies firms might find helpful when negotiating a settlement with the IRS.” The author will have you know that even though most chance meetings with the IRS Collection Division are due to unfortunate tax payment circumstances, there are actually more benign reasons for close encounters of the IRS kind. This does not mean, however, that brushes with the IRS Collection Division will end on an ever friendlier note. “…the Tax Reform Act of 1986 with its added complexity will cause some hospitality firms to inadvertently fail to make proper payments on a timely basis,” Tarras affords in illustrating a perhaps less pugnacious side of IRS relations. Should a hospitality business owner represent himself/herself before the IRS? Never, says Tarras. “Too many taxpayers ruin their chances of a fair settlement by making what to them seem innocent remarks, but ones that turn out to be far different,” warns Professor Tarras. Tarras makes the distinction between IRS the Collection Division, and IRS the Audit Division. “While the Audit Division is interested in how the tax liability arose, the Collection Division is generally only interested in collecting the liability,” he informs you. Either sounds firmly in hostile territory. They don’t bluff. Tarras does want you to know that when the IRS threatens to levy on the assets of a hospitality business, they will do so. Those assets may extend to personal and real property as well, he says. The levy action is generally the final resort in an IRS collection effort. Professor Tarras explains the lien process and the due process attached to that IRS collection tactic. “The IRS can also levy a hospitality firm owner\u27s wages. In this case, it is important to realize that you are allowed to exempt from levy $75 per week, along with$25 per week for each of your dependents (unless your spouse works),” Professor Tarras says with the appropriate citation. What are the options available to the hospitality business owner who finds himself on the wrong side of the IRS Collection Division? Negotiate in good faith says Professor Tarras. “In many cases, a visit to the IRS office will greatly reduce the chances that a simple problem will turn into a major one,” Tarras advises. He dedicates the last pages of the discussion to negotiation strategies

S Corporations Can Benefit Many Closely-Held Hospitality Firms

In his discussion - S Corporations Can Benefit Many Closely-Held Hospitality Firms - by John M. Tarras, Assistant Professor, School of Hotel, Restaurant & Institutional Management at Michigan State University, Assistant Professor Tarras initially offers: “Organization as an S corporation has many advantages for hospitality firms since passage of the Tax Reform Act of 1986. The author discusses those advantages and lists the disadvantages as well.” In the opening paragraphs Tarras alludes to the relationship between hospitality firms, S corporations, and the Tax Reform Act of 1986, and then defines what an S corporation is. “An S corporation is a form of business entity that combines many of the tax advantages of partnerships with the legal attributes of a corporation, including limited liability for its shareholders. Its name is obtained from a subchapter of the Internal Revenue Code. Except for tax purposes, the S corporation is treated in the same manner as any regular corporation. Like a partnership, income and losses for an S corporation are generally passed through directly to shareholders for inclusion on their individual returns. An S corporation thus avoids the double tax problem facing regular corporations.” There are certain criteria to be met and caveats to be avoided in qualifying for S corporation status. Tarras lists and cites these for you. “Due to the complicated nature of S corporations, the election may be inadvertently terminated if the eligibility requirements are violated,” Tarras expands and cites. As the article suggests at the outset, there are advantages and disadvantages to S corporation status; the author outlines some examples for you. “Traditionally, the S corporation has been used by hospitality firms wishing to avoid the double tax problem of a regular corporation,” Tarras informs you. “Regular corporations are taxed once at the corporate level, and again at the shareholder level when income is distributed to shareholders in the form of dividends.” Tarras advises you as to why an S corporation is an advantage in this situation. “Since the S corporation generally is not subject to any corporate taxes, it generally makes no difference whether distributions to shareholders of S corporations are characterized as compensation or dividends,” thus the double tax is avoided. This is just one such positive illustration. Assistant Professor Tarras wants you to know: “Perhaps the most important reason to consider the S corporation has to do with the downward revision of tax rates for both individuals and corporations.” He highlights a case study for you. Some of the disadvantages of S corporation affiliation are the caveats alluded to earlier. They include, “the limitation of an S corporation of 35 shareholders,” Tarras cites. “Also, there are limits as to who may own stock in an S corporation.” These are but two of the limitations of an S corporation. Tarras closes with a further glimpse of the down-sides of an S corporation

Taking the Bite Out of Higher Payroll Costs

Congress, in an attempt to help underemployed individuals, has once again passed a job hiring tax incentive program called the Work Incentive Taw Credit. This article will provide a brief review of the law and offer planning tips for hospitality firms which wish to reduce their payroll costs

Mining and indigenous rights in Sweden:what is at stake and the role for legislation

Mining and the permitting process for mineral projects in Sweden has been criticised as inadequately safeguarding the rights of Indigenous reindeer herding Sámi, who hold usufruct rights to more than half the country’s territory. There have been calls for Sweden to ratify the Indigenous and Tribal Peoples Convention (ILO 169) and to change its Mineral Law. This paper evaluates the extent of protection of Sámi rights — and not only those engaged in reindeer herding — in Sweden’s minerals permitting process. It also considers the implications if changes were made to align this process with the Indigenous-rights framework. The paper demonstrates that reindeer herding Sámi are, broadly, treated similar to landowners in the mineral projects permitting process. However, there is discrimination when it comes to being able to have a share in the benefits of a project: impacted reindeer herders have no such option whereas landowners do. Also, the permitting processes do not consider social and cultural impacts, nor are there obligations for the state to be sufficiently involved in consultation processes. Addressing the identified shortcomings would require only small changes to the Mineral Law and/or to its application and would be possible with only limited impacts on mining because the sector is not a significant user of land whilst it creates large economic values. However, extending those changes (to give parity between landowners and Sámi rights holders) in other important economic sectors which use more extensive land areas, would entail a considerable transfer of resources and associated power. Furthermore, changing the Mineral Law specifically would mean little in terms of safeguarding the rights of the majority of Sami who do not engage in reindeer herding. This suggests that calls for changes to mineral-related legislation to resolve indigenous land right issues are mis-directed or at least insufficient, and that other type of legislative change is required, fundamentally including resolving how extensive and strong the Sámi’s rights to land should be.</p

The Profile and Motivations of Elderly Women Gamblers

Survey research was conducted to determine the profile and motivations of elderly women gamblers. The survey results indicate there is potential to increase revenues by appealing to this segment. Those that do visit casinos, do so primarily for the entertainment and excitement it provides. Furthermore, as a group, elderly women gamblers are disciplined and do not suffer from compulsive gambling problems