For CPAs & Advisors

1. Summary for the reviewer

The owner holds one room-level condominium unit: one specific guest room, with a recorded deed. There are 120 units in the hotel, one owner per unit. The units are offered to accredited investors under Rule 506(c). This is not a residential condo conversion.

A single franchisee holds a unit license from every owner. Hotel staff are on site 24/7, professionally overseen. Owners hire their own vendors and pay those vendors a fixed fee. Paladin does not operate the hotel. Owners have no personal use of the room; it is run as a hotel room year-round.

The hotel sets the Choice base rate. The owner sets their own discount code off that rate. Revenue is recorded per room. Income is not pooled.

HSA below means the hotel services agreement: the contract for on-site hotel work. It is not a tax conclusion.

2. Activity characterization

• Whether the activity is a rental activity is your call under Treas. Reg. §1.469-1T(e)(3). This page does not state an average stay, because no stay figure is published here.
• When the hotel provides stay facts, they are per room. PMS means the hotel's property-management system — the software the hotel uses to record stays.
• The activity unit is the owner's specific room.
• Owners with more than one room may ask you about grouping under Treas. Reg. §1.469-4. The platform can total the owner's own rooms when that choice is recorded. Income is still not pooled.

3. Material participation

• Test 3, Treas. Reg. §1.469-5T(a)(3), is one IRS test a CPA may apply. In plain words: did this person do more of the real work than any other single person? This page does not say the owner meets it.
• Staff time is attributed per named person, so the comparison is against each person, not a combined staff total.
• The platform can show the owner next to the highest single person on that room.
• Work the owner may log: sharing their room discount code and booking link, board votes, and building decisions. Reading, classes, and looking at reports do not count.
• Dashboard and report review is excluded as investor-type activity under Treas. Reg. §1.469-5T(f)(2)(ii). The platform will not draft that time as qualifying.

4. Reporting

Owners may report the room on Schedule E. That is a position for you to review, not a result this page decides. Guest services are delivered by hotel staff under the franchisee's unit license and by the owner's fixed-fee vendors, which is designed to help keep the owner's share out of self-employment tax. You decide.

5. Depreciation

• 100% bonus depreciation under the One Big Beautiful Bill Act for qualified property acquired and placed in service after January 19, 2025.
• Used-property eligibility under §168(k)(2)(E)(ii).
• A cost segregation study — a review that sorts the room into shorter-lived parts — identifies the 5-, 7-, and 15-year components. The remaining building basis is 39-year nonresidential real property (mid-month convention).
• Depreciation is subject to recapture on disposition.

6. Limitations

• §461(l) is the IRS cap on how much business loss can offset wages in one year. The excess carries forward as a net operating loss. You apply the cap.
• §465 at-risk rules apply to the owner's amount at risk, including the treatment of any financing.
• State nonconformity: California does not conform to federal bonus depreciation (Rev. & Tax. Code §§17201, 17250). New York decouples from bonus depreciation and requires the federal amount to be recomputed.

7. One owner, one room

Each owner has their own room unit. Income is not pooled, and there is no partnership return described on this page. Your CPA chooses the forms. Talk to counsel before you rely on any filing position.

8. What your client's records package contains

At year end the owner downloads one ZIP and shares it with you. It is CPA support documentation, not a prepared return. It contains seven components:

1. 00 — Cover memo: Scope, the owner's rooms, the tax year, and how the records were produced.
2. 01 — Qualifying-hours log with attestation: Every approved entry with date, category, description, suggested vs. confirmed minutes, evidence link or owner-reported flag, late-entry flag, and the attestation timestamp.
3. 02 — Participation comparison: Owner hours vs. the highest single person on each room. Test 3 is one IRS test you may apply. This file does not say the test is met.
4. 03 — Discount-code activity summary: The owner's room discount code, booking link, changes, and live dates. The hotel sets the Choice base rate. The owner sets the discount off that rate.
5. 04 — Per-room revenue statements: Revenue by room. Not pooled across owners.
6. 05 — Booking-attribution CSV: Stays booked on the owner's discount code, row by row.
7. 06 — Stay facts, when the hotel provides them: Per-room stay facts from the hotel's system, when they exist. This file does not state an average stay or a tax result.

9. How the hours log is built

The platform is designed so a strict reviewer can trust the log more, not less. The assistant watches what the owner actually does in the platform and drafts an entry linked to that record. The owner confirms each one.

• Every entry starts as a draft. Nothing counts until the owner attests to it; the platform has no path to approve an entry on the owner's behalf.
• Suggested and confirmed minutes are both preserved. The suggestion is frozen at creation and defaults to the category median, never a cap.
• Entries are split into evidence-linked (a platform record exists — a discount-code change, a post approval, a vote, a capital decision, a meeting attendance, a message to the hotel) and owner-reported (the owner described work done outside the platform, in their own words and with their own time estimate).
• Owner-reported drafts cannot be bulk-confirmed; each one is confirmed individually.
• Per-category plausibility caps: a time above the cap (for example, a share-link send over 30 minutes or a vote over 90 minutes) requires a typed note before confirmation.
• Entries confirmed more than 14 days after the activity are flagged late in the package. Entries cannot be backdated into a prior tax year.
• Every create, confirm, edit, and void writes an append-only audit trail that cannot be updated or deleted.

10. Tax opinion

Donovan Legal PLLC is federal tax counsel to the offering. Owner-level reliance opinions may be available. The fee is not listed on this page. Email hello@paladinequity.dev or book a call and ask for it.

11. CPA partner program

Create a CPA account to receive your linked clients' records packages directly, with a biweekly digest of their progress. The partner agreement is presented on first login.