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Old 10-02-2013, 11:50   #16
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Re: Boat ing Fun as a Business

Did you notice on those links that some of these loopholes were scheduled to expire Dec. 31 2012? I wonder if they got extended.
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Old 10-02-2013, 21:51   #17
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They did in the last minute budget fiscal cliff whatever deal.


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Old 12-02-2013, 10:50   #18
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Re: Boat ing Fun as a Business

I've looked at the Bay Yacht program called "Boat As A Business". They have seminars every hour or so at the Annapolis boat shows and I once joined one of their webinars. It goes something like this: step 1) buy a boat through us, step 2) place it into charter, preferably with us, step 3) use it whenever you want, step 4) take huge tax deductions against your regular income including very aggressive depreciation, step 5) have the boat fully paid in a short time through your tax savings. Easy, what could go wrong! Actually, a lot. To begin with, in order to take deductions the way they claim, you have to be "actively" involved in the business. Read the IRS rules for Active vs Passive business. The requirements are very hard to meet if you've turned your boat over to a charter management company. They will tell you there are ways around it, like making sure your hours spent on the boat exceed any other single individual's hours, even though collectively the individuals who are actually managing the boat put in a lot more time than you do. Bottom line, in my opinion, you're asking for serious IRS trouble if you try this, but I'm sure they've gotten a lot of people to do it. We own a boat in charter in the BVI but we use the vacation property rental rules for taxes.
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Old 12-02-2013, 15:27   #19
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Re: Boat ing Fun as a Business

Quote:
Originally Posted by RRMontgo View Post
I've looked at the Bay Yacht program called "Boat As A Business". They have seminars every hour or so at the Annapolis boat shows and I once joined one of their webinars. It goes something like this: step 1) buy a boat through us, step 2) place it into charter, preferably with us, step 3) use it whenever you want, step 4) take huge tax deductions against your regular income including very aggressive depreciation, step 5) have the boat fully paid in a short time through your tax savings. Easy, what could go wrong! Actually, a lot. To begin with, in order to take deductions the way they claim, you have to be "actively" involved in the business. Read the IRS rules for Active vs Passive business. The requirements are very hard to meet if you've turned your boat over to a charter management company. They will tell you there are ways around it, like making sure your hours spent on the boat exceed any other single individual's hours, even though collectively the individuals who are actually managing the boat put in a lot more time than you do. Bottom line, in my opinion, you're asking for serious IRS trouble if you try this, but I'm sure they've gotten a lot of people to do it. We own a boat in charter in the BVI but we use the vacation property rental rules for taxes.
This is spot on and what I was talking about in my earlier post. It is doable but the average owner will never qualify no matter what they tell you.
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Old 22-04-2013, 06:58   #20
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Re: Boat ing Fun as a Business

I fled the corporate rat race 10 years ago by starting a charter business on a cat in the Caribbean. Back then, my accountant told me it wasn't a wise choice. Years later he told me that he wishes that he had the balls to do what I did. He is still in his office and I've had 10 awesome years of cruising.
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Old 22-04-2013, 07:41   #21
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Re: Boat ing Fun as a Business

Quote:
Originally Posted by RRMontgo View Post
I've looked at the Bay Yacht program called "Boat As A Business". They have seminars every hour or so at the Annapolis boat shows and I once joined one of their webinars. It goes something like this: step 1) buy a boat through us, step 2) place it into charter, preferably with us, step 3) use it whenever you want, step 4) take huge tax deductions against your regular income including very aggressive depreciation, step 5) have the boat fully paid in a short time through your tax savings.
I do not believe you can take a deduction against regular income, only against other capital gains and/or against the income from the business in question. You can carry forward losses and deduct then against other cap. gain in the future, but not income. If your boat business is your primary source of income, that's different. But in order for it to be so, it needs to be making more $$$ than anything else you're doing.

In fact, if you go to a seminar that tells you otherwise, you should call the IRS and tell them. It will be the last seminar they'll give.

When talking about six figure dollar values, you will also definitely attract the attention of the IRS. Imagine if you had to pay back your $200,000 refund along with some massive penalty and potentially even jail time? That would NOT be fun.

Remember, they arrested and convicted Al Capone on income tax evasion, not murder.
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Old 22-04-2013, 08:46   #22
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Re: Boat ing Fun as a Business

It doesn't matter if the boat is your primary source of income or not. What matters is whether it is a "passive" investment or an "active" investment. If you use any sort of charter management company, it is going to be difficult to get the IRS to accept it as an "active" investment. You are going to have to be very thorough and careful about documenting your activities.

You are going to also have to really be active in the management of the boat. No amount of documentation is going to help if you just sit back and let the company manage the boat for you.

Some people do manage it, and get the tax deductions, and end up doing fairly well. But make no mistake, they are running a business. They are not just sitting back, letting the management company handle all the headaches, and raking in the money.

By the way, to the OP, if you are talking about "Boat as a Business" then there is nothing wrong with saying so. You aren't violating any copyrights, and you aren't infringing on their trademark, when you refer this particular company.
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Old 22-04-2013, 09:55   #23
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Re: Boat ing Fun as a Business

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It doesn't matter if the boat is your primary source of income or not. What matters is whether it is a "passive" investment or an "active" investment. If you use any sort of charter management company, it is going to be difficult to get the IRS to accept it as an "active" investment. You are going to have to be very thorough and careful about documenting your activities.
Ah yes, I may have been confusing "capital loss" vs sec 179 and depreciation. I sometimes get the two confused in my head.

I think you can take a 179 and/or a depreciation deduction against normal income. But then, as many of noted, it becomes largely about your material participation.
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Old 22-04-2013, 10:59   #24
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Sorry, my psychic powers are not at their best this afternoon, could you explain what you are talking about?
+1. People are shooting in the dark here. Could the OP explain WTF he's not talking about.?

Discussing avoiding taxes is not a crime.
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Old 22-04-2013, 15:27   #25
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Re: Boat ing Fun as a Business

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+1. People are shooting in the dark here. Could the OP explain WTF he's not talking about.?

Discussing avoiding taxes is not a crime.

Click on those links in post 11.
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Old 23-04-2013, 08:04   #26
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Re: Boat ing Fun as a Business

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Click on those links in post 11.
SandCrab,

Thank you. I didn't expect it would be that difficult for folks to figure out.
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Old 23-04-2013, 08:08   #27
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Re: Boat ing Fun as a Business

Google's a great resource.
Bay Yacht Agency Page Bay Yacht Agency Group. We offer new and brokerage boats. Power and sail. Monohulls and catamarans. We also offer a unique Boat-As-A-Business plan.
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Old 23-04-2013, 16:13   #28
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Re: Boat ing Fun as a Business

If you are operating a business, and the boat is a business asset, then it is legitimate.

If you are operating a sham,and using the boat for personal purposes, then it is not legitimate.

The part that you are not being told is what you are "supposed" to do upon exit of your business, when you are ready to sail off into the sunset.

That's where the interpretation begins.

ADDING:
The distinction between active and passive investment is also important.
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Old 23-04-2013, 16:18   #29
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Re: Boat ing Fun as a Business

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I fled the corporate rat race 10 years ago by starting a charter business on a cat in the Caribbean. Back then, my accountant told me it wasn't a wise choice. Years later he told me that he wishes that he had the balls to do what I did. He is still in his office and I've had 10 awesome years of cruising.
You should never ask an accountant for tax or investment advice. They are trained from birth to always advise against everything.

Let me put it a different way - always ask "how do I" instead of "should I" or "can I"
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Old 23-04-2013, 16:30   #30
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Re: Boat ing Fun as a Business

Skimming this thread I keep hearing someone saying, "If it sounds too good to be true, it probably is."
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