A Tax Primer for Bed and Breakfasts

Abstract

To be considered a business and not a hobby, a B&B must be operated with the intent of making a profit. Personal expenses must be clearly delineated from business expenses for tax purposes, and exclusive-use rules apply to most deductible expenses. Certain expenses may be deducted in full on the owner's tax return but others, such as start-up costs, improvements, appliances, and furniture-including eligible antiques-must be depreciated over time (some exceptions exist). Cash deposits collected to secure advance reservations require special tax treatment as do inventories of goods purchased for resale. B&B workers may be employees or independent contractors, and it's imperative to know the difference. The B&B's legal status will affect many aspects of its tax liability as well as that of its owners, partners, family-member employees, and shareholders. B&B owners and operators should be familiar with the IRS's Audit Guide for Bed and Breakfasts, which can help owners understand what may be asked of them in an audit and what third-party information is available to the IRS. The guide can also enhance the quality of B&B record keeping.

An Exploratory Study of Perceived Importance of Web Site Characteristics: The Case of the Bed and Breakfast Industry

“…Since then, many hospitality researchers have concentrated their research on B&B marketing and advertising in order to identify how B&B operators attract more customers to their facilities, what amenities and services should be provided to increase repeat businesses, and what are the major characteristics of B&B accommodations and customers in the US (Emerick & Emerick, 1994;Kaufman & Weaver, 1998;Kaufman, Weaver, & Poynter, 1996;Kelley & Marquette, 1996;Lubetkin, 1999;Zane, 1997).…”

Factors Affecting Inn Operators’ Willingness to Pay Resource Protection Fees: A Case of Erhai Lake in China

“…During the early years, many tourists travelled to Dali before they become inn operators. Most of them rented a local farmhouse and decorated their inn, resulting in an intimate, quaint, and attractive house with a relaxing home-away-from-home atmosphere [81]. Cultural identity influences their lifestyle and action, because they like the lifestyle of the Bai indigenous people residents and agree with the Bai culture around Erhai Lake.…”

“…We then performed bootstrapping (5000 resample) to assess the significance of path coefficients in the structural model [80]. By evaluating the path coefficient, we can know the strength of the relationship between the latent variables, and at least 0.1 should be achieved to qualify as a meaningful path [81]. Perceived benefit had a positive impact on WTP, with a path coefficient of 0.081.…”

Toward an Entrepreneurship Typology of Bed and Breakfasts

“…In the late 1970s, the lodging industry recognized B&Bs as a separate sector. Some hospitality researchers have studied B&B marketing to identify how B&B operators attract customers to their facilities, the amenities and services that increase repeat business, and the features that characterize B&B accommodations and customers (Emerick & Emerick, 1994; Hill & Busby, 2002; Kaufman & Weaver, 1998; Kelley & Marquette, 1996; Lubetkin, 1999; Zane, 1997). Successfully operating a B&B requires sufficient business knowledge, considerable financial ability, various marketing techniques, and an awareness of the hospitality industry (Kaufman & Weaver, 1998).…”

“…The B&B concept can be traced back to World War II in Great Britain, and the B&B sector experienced rapid growth in the United States in the late 1970s (Kelley & Marquette, 1996). The number of B&Bs peaked at 20,000 during 2000 to 2005 in the United States, and subsequently declined to 15,000 today (Abkowitz, 2013).…”