Income Tax Planning

Acquisition Allocation Case Study: Hotel Portfolio

A hotel-portfolio case study on why purchase allocation, contract drafting, and depreciation support should be reviewed before closing.

Planning resource

A working asset for the next advisor conversation.

Use this resource to organize the facts, records, and timing questions before the planning window narrows.

Format

Case Study

Window

Acquire

Output

CPA-ready

Allocation risk snapshot

Purchase allocation can quietly reshape depreciation and future tax exposure.

The case shows why contract allocation belongs in the acquisition review, not in cleanup years later after schedules and reporting have already absorbed the numbers.

portfolio scale

Hotel properties in the owner portfolio.

$20M+

largest deals

Each of the two largest acquisitions exceeded this level.

$100K+

challenged bill

Later state review before negotiation.

Case chart

State challenge reduced after review

Indexed view: the state challenge is shown as 100 because the public case describes a bill above $100,000 and a negotiated reduction of more than half.

Initial challenge

State review challenge.

$100K+ indexed

After negotiation

Reduced by more than half.

<50% of original

Major acquisitions

Largest deals exceeded $20M each.

2 of 14

Planning path

Step 1
Review purchase agreement
Step 2
Support asset allocation
Step 3
Protect depreciation basis
Step 4
Hand CPA a cleaner file

Case StudyAcquireownerinvestoradvisor

Last updated: 2026-06-26

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Case-study issue

A hotel owner built a 14-property portfolio, with the two largest acquisitions each above $20 million. The operating skill was real, but the purchase agreements had a hidden tax problem: the seller's attorney controlled the allocation between land, building, tangible personal property, and other assets.

Years later, a state review challenged parts of the allocation. The result was a tax bill above $100,000, later negotiated down by more than half, plus a harder long-term problem: the corrected allocation reduced depreciable personal-property basis that had been supporting accelerated depreciation.

Why it matters

Acquisition planning is not only about price, cap rate, and financing. The contract and allocation can shape depreciation, sales tax, property tax, recapture, and future disposition choices for every year the owner holds the property.

Planning checks before closing

Who is drafting the purchase agreement?
Does the allocation serve the buyer's depreciation and basis position?
Are tangible personal property, land, building, and other assets supported by defensible facts?
Will the closing documents be usable for the CPA and any cost segregation review?

JPOPE planning lens

The right review happens before the contract terms are fixed. Once the allocation has flowed into depreciation schedules, future corrections can cost more than the planning would have.