miamioffshore

Wondering how many of you have purchased your boat and titled it under a Corporation or LLC? I've read about it and am aware of the reasons for doing so. Just wondering how common it is and what expereience others have had with doing so.

Thanks,
M

Anarchy Powerboats

mine is under an LLC, strictly for liability reasons. I am only listed as a member under the LLC and can't be personally held liable in the event of a catastrophe.

dean51267

The rules here are much more strict than most want to believe, everyone wants to believe "well I just put it in LLC or Corp and then I am protected if I run someone over, and I can write it off", neither is generally true.

The standard of what is reasonable and customary must be defined, and this standard must be followed to avoid being personally liable for negligence. In most parts of the marine industry reasonable and necessary would mean licensing, formal training, all that stuff, the same stuff you would do before allowing employees to use the boat. Few people do this, setting themselves up a false shield. Also yo uwould have to show a "reasonablness" standard, meaning "why would a XYZ company have a boat?", if you are a marine shop, that is an easy question, if a contracting firm it is more difficult.

As to tax purposes, the IRS is all over business owners buying boats for personal use and calling them personal property. There is some ways to do it, but they are egregious by most standards. Additionally you have to show the boat was used as company property, an asset of a business, not a pleasure item for the share holders.

I do play the game here, but again, there is more to it than just "titling and paying" from within the company to get the benefits.

call if you want to discuss 270-554-0720, also state law will apply here, so no one place has all the rules.

t500hps

Mine is owned by a corp, but not for liability reasons....It is titled in another state that has no sales tax, registration "tax", or personal property tax.

Prater

I too was going to list my boat under the company, but after checking with my tax man there was no benifit. It can not be wrote off unless it is used only for business. Liabilitty will still go to the judges decision in an accident.

miamioffshore

And what state might that be? That's what I'm talkin about! However if I do that and use it in Florida isn't FL gonna try to hit me with a "use tax" cuz I'm using it in their waters?

In other words "is there a legal way not to have to pay sales tax on a used boat purchased from a private individual out of state?"

Thanks!

Tantrum

While I agree with what dean51267 said, this says the same thing Prater made it short and sweet.
Im interested to hear how others are doing it and why they think it is worth it if it is registered under a corp. I was sure I was going to buy my cat under a corp or LLC and neither my lawyer nor accountant could find a benefit for my situation.

dean51267

It really depends on your type of business, and how creative you are. I can make a STRONG case that every time I have been out in my boat I was "entertaining" prospective or current clients, or prepping to "entertain" someone who I may want to do business with. This gets me past the operating cost, but not the purchase cost, and since in my business everyone is a "prospective" client it is a defensible argument.

When you trip off into the corp/biz tax world you have to think "reasonable and necessary" to determine if something is deductible. Example, for a carpenter a skill saw would be deductible, for an accountant it gets far more difficult. If your office has a multi-media training room, a surround sound entertainment may be appropriate, where another business in your industry across the street would not be able to defend that in an audit.

That open up the planning angle, meaning you "create" a situation that would allow the boat to be deducted. Example, if you own land and want to write off the tractor you use to bush hog with, you lease part of it out to hunters or a farmer and bush hog a few trails with it. Then the tractor becomes deductible.

As to a boat, I would think buying part ownership in a marina would be a pretty good way to justify the write off, maybe owning a part time repair shop would help, then you could make the case it is a "rental" for people who are having their boat repaired.

Also advertising opens up a nice option, can you reasonably justify the cost of the vehicle as an advertising expense. I have a bright yellow H2, says "Super Tax" all over it (one of my companies), it is by far and away the best advertising I have ever done, so I book the vehicle as a company asset, and write it off. Were it not lettered up I would have a hard time justifying why a CPA firm owns a H2.

You may want to have a "exploring" discussion with your CPA or tax ad visor, determine what would it take to justify writing off something. You have to show your intent to make a buck was serious, but you do not HAVE to make a profit (the 3 in 5 year rule is a fallacy).

If you want to bounce it around sometime call me and I will try to help.

t500hps

Miamioffshore.....I trailer the boat from my home and/or store it at our house on the river. The usual way the "tax man" finds a boat is because a marina or storage lot has to report the vessels that are kept there to the local gov. I formed a corp in DL with the Yacht Registry. http://www.delreg.com/yacht.cfm

They were real easy to deal with and take care of registering the boat for a small fee. Like others have said, there is no real liability advantage, but the tax issues make it real appealing for me.

dean51267

Very interesting, KY passed some horrible corp laws late last year, and made them retroactive. As soon as tax season is over I need to investigate moving a BUNCH of corps.... this give me food for thought.... thanks...