Like Tree0Likes

Is anyone expensing their boat?

Reply
Old 04-08-2008, 09:40 PM
  #1
Gold Member
Gold Member
Thread Starter
 
Ona-Mission's Avatar
 
Join Date: Apr 2008
Location: Tampa, Fl.
My Boats: boatless
Posts: 739
Default Is anyone expensing their boat?

Is anyone expensing their boat completely? My accountant tells me that to totally expense my boat I need to compete. I am also told that poker runs are not competing. Is anyone expensing more then gas, a few repairs and entrance fees to a charity event (poker run)? If I had a car and took it to the track every weekend to compete I could expense that. I feel like there must be a way. Maybe itís just wishful thinking, but I have to ask everyone before I give up trying.
Ona-Mission is offline  
Reply With Quote
Old 04-08-2008, 09:54 PM
  #2
Registered
 
Join Date: Apr 2003
Location: Auburn Wa.
My Boats: 2006 35' Nordic Flame 2013 39' Spectre CC
Posts: 314
Default

biggest problem with expensing vehicles (boat, cars) is that if you expense it completely, then sell the vehicle, you have to recapture the sale as income. The tax man will get you in the end, expensing only delays the tax occurance.
beertruck is offline  
Reply With Quote
Old 04-08-2008, 10:00 PM
  #3
Gold Member
Gold Member
Thread Starter
 
Ona-Mission's Avatar
 
Join Date: Apr 2008
Location: Tampa, Fl.
My Boats: boatless
Posts: 739
Default

Thanks for you input. Is it possible to lease it with a $1 buy out? at the end of the lease it doesn't have any value and maybe easy to hide the sale?
Ona-Mission is offline  
Reply With Quote
Old 04-08-2008, 10:12 PM
  #4
Registered User
 
kenvik01's Avatar
 
Join Date: Apr 2005
Location: Hendersonville, TN. Soon to be Sanford, FL
My Boats: 2004 Challenger DDC 28
Posts: 321
Default

I expense mine as a 2nd home. As long as you have a sink, potty, place to sleep, and means to cook,, you can wright it off. I also (at the advice of my accountant) write off my vehicle mileage to PR, as most (that I attend) are for charity.
kenvik01 is offline  
Reply With Quote
Old 04-08-2008, 10:21 PM
  #5
Registered
 
jhiguy377's Avatar
 
Join Date: May 2005
Location: Lake Oswego OR
My Boats: 377 Scarab
Posts: 989
Default

Ona-Mission,
Gov't just changed near zero cost leasing rules in '07 I believe.(1$ buyout). There is an excellent way to expense boats however according to an accountant who gave an in depth presentation at my company a few years ago. He detailed the then current IRS rules applying to "second residences". As I recall there were requirements about sleeping quarters, toilet/bathroom/head, cooking area etc. Might be worth looking into; don't see a real problem with delaying tax consequences until we're in a better bracket (older). Dean5127 who's normally a regular poster here on OSO (tax season right now) could probably shed some light on this. Best luck to you. -Jeff
jhiguy377 is offline  
Reply With Quote
Old 04-08-2008, 10:54 PM
  #6
Registered
 
Join Date: Apr 2003
Location: Auburn Wa.
My Boats: 2006 35' Nordic Flame 2013 39' Spectre CC
Posts: 314
Default

I think the second home classification allows you to right off the intrest paid on the boat, not expense it, providing it meets certain IRS ctiteria.

I am not a CPA, but had lenghty discussions with my CPA on ways of making my toys work harder for me. Again these work mostly as delay tactics, with the hopes of being in a better tax situation when they catch up with you.

Far smarter men than I have tried to out fox the IRS, and they have seen just about every trick in the book.



i
beertruck is offline  
Reply With Quote
Old 04-08-2008, 11:08 PM
  #7
Registered
 
Join Date: Jun 2004
Location: Freehold, NJ
My Boats: 32 SeaCraft
Posts: 1,381
Default

I don't know how this applies to a go fast, but our CC is a charter operation. Whether it looses or makes money doesn't matter, you write 100% of expensives off same as you would if you were an owner operator with a truck.

If you had a Capt license I guess you could charge your guests, show some income and therefore be entitled to the write-offs?
HabanaJoe is offline  
Reply With Quote
Old 04-08-2008, 11:53 PM
  #8
Registered
 
mpally's Avatar
 
Join Date: Oct 2000
Location: St. Louis/ LOTO
My Boats: 36 Outlaw
Posts: 1,371
Default

I am not sure what exactly you are referring to when you say expensing. If you have a head, a bed, and a galley, you can write off the interest on the boat as a second mortgage. However, you can only write-off interest on two "homes".

The biggest issue to overcome when writing off acutal expenses, ie. gas, maintenance, etc., is proving that you truly have a business (ie. profit motive) rather than a hobby. I don't think you could convince an IRS agent that you enter poker runs to make a profit. I prepare the tax returns for an offshore race team and we sucessfully argued with an IRS agent that there was a profit motive and it wasn't a hobby, but the operations must be set up correctly.

Bottom line, most boating activities are hobbies. Any reducing in your tax liability by deducting your boating expenses can easily be eaten up in professional fees to defend your case and there is no guarantee of winning the argument. It's probably not worth it.
mpally is offline  
Reply With Quote
Old 04-09-2008, 12:03 AM
  #9
Platinum Member
Platinum Member
 
H20 Toie's Avatar
 
Join Date: Sep 2004
Location: Channel Islands CA
My Boats: Got nothing
Posts: 1,462
Default

My boat is used for entertainment so i can write off the expenses. It is almost depriciated out which is one of the reasons i put it up for sale. but anything that i sell it for over what it is on the books for i have to pay capital gains.

you just have to work the numbers when you sell it

Plus you have to keep a record to prove it was just for entertaining clients and not for personal use
Attached Thumbnails
Is anyone expensing their boat?-dsc01364.jpg  
H20 Toie is offline  
Reply With Quote
Old 04-09-2008, 12:17 AM
  #10
Registered
 
mpally's Avatar
 
Join Date: Oct 2000
Location: St. Louis/ LOTO
My Boats: 36 Outlaw
Posts: 1,371
Default

Meals and entertainment expenses are only 50% deductible. If you are taking clients out for entertainment, your tax preparer should only be deducting 50% of the total expense.

To avoid paying tax in the year of sale on the gain on the sale of the boat, it may be worth it to do a like-kind exchange. It doesn't avoid the tax liability, but it defers it to a later date. You can keep doing like-kind exchanges and defer the income for a number of years.
mpally is offline  
Reply With Quote
Reply

Related Topics
Thread
Thread Starter
Forum
Replies
Last Post
kswest
General Boating Discussion
44
04-16-2006 12:25 PM
BK
General Boating Discussion
0
03-11-2004 11:12 AM
Hauling Trash
General Boating Discussion
7
06-11-2002 09:06 PM



Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are On
Pingbacks are On
Refbacks are On



All times are GMT -5. The time now is 11:27 PM.


Copyright 2011 OffShoreOnly. All rights reserved.