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Tax write offs with your boat

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Old 09-14-2005, 02:53 AM
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Default Re: Tax write offs with your boat

Best option (and it's a risk) is the 2cd home option. A portapotti, hotplate and sleeping bag qualify it. I wouldn't even go there though--they are looking for "examples". Fuel, some maint, supplies etc are safe and possible use as advsertising expense via direct payments coded as advertising or "charter" boat for company entertainment.

For the minimal benifit it's really not good bet in the overall analysis
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Old 09-14-2005, 06:34 AM
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Default Re: Tax write offs with your boat

There is a fine line between tax avoidance and tax evasion.

You cannot take your $168,000 Bentely.place a sign on the side and write it off. You can only write off the standard deduction for a vehicle as outlined by the IRS. Example: Ford Taurus.

I am allowed to write off the % of my plane used for work. The rest I eat. There is no FIXED or PRESET $ amount on the plane.

You are allowed to write off interest on a boat as a second home if it has a bed, john and stove. However, if you already have a second home you are currently deducting you cannot.

Talk to you tax accountant. For the few $ you save you could cost yourself a bundle. Once you are audited I guarantee you they will find something and dig back 5 years.

OUCH!

There are certain RED FLAGS tat the IRS look. Today, your return information is entered into a computer. If the averages check out and there are not any RED FLAGS or items that trip the breaker, you are OK. Offices in homes, boats as second homes large advertising budgets are a few examples.

Last edited by expresscat39; 09-14-2005 at 07:05 AM.
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Old 09-14-2005, 09:37 AM
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Default Re: Tax write offs with your boat

The auditing function of the IRS is weak at best. Some good advice so far and I'm by no means an expert. The 2nd home write-off is probably your safest and easiest bet...as already mentioned, a porti-pottie, a portable grill, and a sleeping bag will allow you to write off the interest on the boat loan as a 2nd mortgage. expresscat mentioned red flags...home offices and 2nd homes are not red flags....amounts that are not in the average range are red flags. Be smart about it and you can use the boat as a write-off in a number of different ways.

Find an aggressive tax preparer and you will be A-OK!
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Old 09-14-2005, 11:50 AM
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Default Re: Tax write offs with your boat

The info on the port-a-grill and port-a-potti here is incorrect. I was a boat broker and every single person asked this question about writing it off. The cooking, sleeping, and bathroom facilities must be fixtures of the boat and not carry on items. If you try to write off too much of your boat as entertainment or advertising (unless you're racing) you are asking for red flags. Boating is expensive. Period. If you can't afford it, get a smaller boat or don't do it.
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Old 09-14-2005, 11:52 AM
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Default Re: Tax write offs with your boat

So how does the RACING, play into the game and what are the advantages.
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Old 09-14-2005, 11:59 AM
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Default Re: Tax write offs with your boat

Dangerous Dave,

I disagree with you about what can be considered a 2nd home. IRS Publication 936 states that:

For you to take a home mortgage interest deduction, your debt must be secured by a qualified home. This means your main home or your second home. A home includes a house, condominium, cooperative, mobile home, house trailer, boat, or similar property that has sleeping, cooking, and toilet facilities.

I don't see any clarification that states the fixtures must be permanently attached. I guess file at your own risk...I know what I do.
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Old 09-14-2005, 05:41 PM
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Default Re: Tax write offs with your boat

Thanks for all the input. It appreciated.

Maybe sell the lakehouse, get the interst deduction from the boat, move my crappy laptop below and take a home office deduction. Not really...

Dave, I would be intrested in knowing what the racing part has to do with this and what its advantages are. Get a nice cig and have no intentions of winning just get the deductions and business writeoffs., You know just out on the course and criuse and let the really high dollar boys blow on by.
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Old 09-14-2005, 06:46 PM
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Default Re: Tax write offs with your boat

A race team can be it's own entity. In other words you can incorporate it. You and/or sponsors or your company fund it by paying for the advertising space on the side of the boat. Obviously the boat will not generate income but the money you feed the race team to make it operate is a business expense. The poker run thing may have some merit because it is an organized event with enrty fees and such.
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Old 09-14-2005, 07:34 PM
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Default Re: Tax write offs with your boat

Dave 1972, you are correct. The items do not have to be fixtures in the boat. If you have two homes already, you may be able to purchase a boat with a home equity loan and the interest may be deductible, with some exceptions. Email me and I can give you more specific details. I am a tax accountant and I will say that it is very difficult to give tax advice without having a 1040 in front of me. There are some many things that can affect the tax outcomes of transactions that blanket statements usually do not work for most. Any other ideas other than the 2nd home deduction and using a home equity loan to purchase a boat are about the extent of tax favorable transactions regarding a boat that will pass the IRS test under audit. Trying to write off a boat as a business expense is not going to fly under these circumstances.
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Old 09-15-2005, 12:07 AM
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Default Re: Tax write offs with your boat

The race team corp route is similar to something that I looked into. I was looking to create a advertising company that would purchase nice toys, find customers/sponsers to have their logos put on the vehicles, and in turn I would show the vehicles at shows, drive them around DISPLAYING the advertisements, get them into print media, as well as tv. Donations from venders to get their name on the vehicles has to be treated as income. You can now drepreciate the vehicles, and write off all expenses. These are the problems my accountant told me of. First off he said for the IRS to consider it a legit business they want to see it turn a profit 2 out of 5 years, otherwise they look at it as a hobbie. Second problem as stated above was the recapture of the depreciation
when you sell the vehicles. Now you can fight the hobbie thing by showing it is a legit company. company bank accounts, federal tax id ect.. will help proves this, put who wants to have the IRS in your face asking questions about your finances. Just not worth it for me.
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