OK, before anyone gets the idea that I am advocating hiding any expenses or anything else let me set this straight.
I am a sole proprietor. I show on my schedule-C everything that I claim for the B & B. What I do not claim for the B & B are things that I will be paying taxes on until the cows come home. We have a nasty little tax called personal property tax here. I pay taxes on EVERYTHING in the B & B on July 1 that I have ever claimed on a Schedule-C - linens, silverware, furniture, TV, they take my food expenses for the year and divide by 12 to decide what I had in the cupboards on July 1, etc and this determines how much I will have to pay for personal property for the inn. I claim every Directory fee, ad, ad design, and any other expense that will not bite me. The last person I am going to cross is the tax man. All else goes down as my personal expenses - as in mileage and other things that could easily be business expenses - while doing MABB marketing I put a ton of miles on my car that I did not claim. That is what I mean by not claiming all expenses.
I have never purchased an inn and so far have never sold one. I do know that I just spent about $3000 to upgrade the owner's bathroom and those are expenses I have no intention of ever claiming. When I am ready to put this place on the market - nothing will be held back as far as information requested. I live in a small town no one could hide anything if they wanted to.