Free Consultation

Transaction Price Segregation

Transaction Price Segregation (TPS) allocates the components of value in the acquisition of a hotel property proactively for State & Local Tax purposes. The value of these business assets is referred to in the accounting world as a “going concern and/or business enterprise value.”

There are three individual components that Paradigm examines:

  • Real Estate – tangible property that makes up the structural component of the purchase.

  • Personal Property – tangible property that consists of the objects within the real estate required to operate the business such as office equipment, furniture, security systems, etc.

  • Intangible Assets – personal property that has no physical presence, such as franchise value, workforce in place, start-up costs, trade secrets, copyrights, name of the business, and reputation.

Quantitative Example of TPS Benefits

TPS allocates the components of value in the acquisition of a hotel or resort property proactively for State & Local Tax purposes. The value of these business assets is referred to in the accounting world as a “going concern and/or business enterprise value.”

  Allocated Unallocated / Under Allocated
Purchase Price $50,000,000 $50,000,000
Real Estate Component $35,000,000 $45,000,000
Tangible Personal Property $5,000,000 $5,000,000
Intangible Personal Property $10,000,000 $0
Transfer Taxes $700,000 $900,000
Real Estate Tax Basis Per Deed $35,000,000 $45,000,000

$100B

buildings icon

0

map icon

0YRS

people icon

As you are aware, we are all facing an unprecedented health event involving COVID-19. We here at Paradigm Tax Group consider the safety of our employees, as well as our clients, our top priority. We want you to know that during this major event, we are still open for business and ready to serve the property tax needs of all of our clients and will do so with the health and safety of everyone concerned at the top of our minds. READ MOREā€¦

Contact Your Local Property Tax Expert

  • Paradigm Tax Group does not service single-family residential properties at this time. We apologize for any inconvenience.