Once you take your boat out of charter, you create a taxable event. That's when you will pay all the taxes
you "saved" when you started the business.
Lets say you buy a new laptop
for your business for $1500. You take a 179 deduction. Makes sense, laptop computers
are pretty cheap
, they don't last that long, and who wants to screw around with a 10 year depreciation schedule on that? It's a waste of accounting effort.
Later, when you sell the laptop or convert it to personal use, you're supposed to report that as income
- and pay tax on it. Now most people don't. "Oops - the laptop was lost/broken/stolen/given-away. I depreciated away the whole cost and it was worthless when I disposed of it."
Try that with a yacht. If you depreciate $400k (for tax purposes), you will save a lot of taxes
. When you later convert the yacht to personal use or sell it (say, for $300k), you will have to pay taxes on that $300,000 "gain" - that's a lot of single
, especially if you are already in a high income bracket that year.
Lots of 179 tax dodges are based on the expectation that the IRS will never come looking for you, but if they do...