Boat As A Business™

[dochueb]

Does anyone have any experience / first hand knowledge of the Bay Yacht Agency &/or their "Boat As A Business™" plan?

Thanks,

DH

[skipmac]

Never heard of them but looked at their web site and it looked just a little too slick for my taste. Plus the little blurb "secret lists that your broker doesn't know about"? Anytime I see someone trying to sell me something that claims to have special knowledge that no one else knows I smell snake oil.

And what is this "business" they refer to that isn't charter?

[James S]

They say its a charter business.

[Hud3]

I chartered an Ericson 38 from them quite a few years ago. I suppose it might have been a "Boat as a Business" boat. They were a good charter company and they've been around for a long time, located right next to the Charter House restaurant in Eastport. I wouldn't rule them out because their website is a little funny looking.

[skipmac]

Originally Posted by James S

They say its a charter business.

Oh. I saw a note on the home page, point #6 that said "hint, this is not a charter company plan" so jumped to a conclusion. That's what I get for jumping.

But what is their plan and why is it so different from a "charter company plan"?

[Sander]

I found them very pushy and they don't really listen. I have asked for 2 quotes on new boats from them and both times I received quotes that didnt meet the agreed spec and that had many many "extras" and other things omitted. They turn it into a jigsaw puzzle.
They also used an off market exchange rate (for a european boat) and then claimed i was getting a rebate by applying the current exchange rate!
Also, every time you speak to a broker and give him info you then hear back from "the president" of the company! It's a bit strange and they obviously try to close deals in this way (or think the brokers cant close) but either they don't communicate well amongst themselves. Either "the president" doesn't listen to his brokers or he doesn't read his customers emails because he is in too much of a hurry to close the sale.
Either way, it's all about them and not about the customer. That doesn't work when you're spending such a huge sum of money and they have put me off completely.

[hellosailor]

"But what is their plan and why is it so different from a "charter company plan"? "
Didn't see this thread last year but I suspect I have an answer for you.

Razzle-dazzle, PTBarnum, showmanship.

A conventional charter company plan has the investor buying a boat and putting it into service with a charter company, which sets all the terms and runs all operations.

This sounds more like what savvy private aircraft owners have done for many years. You buy your own vessel, equip it as you please, set the terms you please, and then just hire an "arms length" manager to solicit business chartering it. But YOU set the terms, YOU run a one-vessel charter company, as opposed to buying into a boat in someone's fleet.

The tax advantage to this is that the vessel is a business and everything is business profit or cost or loss. The key to making this legal is that when you want to use your own vessel, you pay the same rates, through the same manager, that the general public does. You're paying to use your own boat (or plane) but that still makes sense, because your money comes back to you as profit on the business, if the business is doing well.

Having the arms-length manager (charter agent, etc.) and paying the same as everyone else is what makes it work. Sounds like these people are being that manager, and providing those services, but doing it one-for-one instead of imposing fleet policies on everyone.

How well they do that, or if they do that, or how much is razzle versus dazzle...Damfino, but if someone doesn't give me straight answers I say thank you, goodbye. The only Magical Mystery Tour I'm interested in, isn't taking reservations anymore.

[videobear]

My understanding is that, unlike a traditional charter company, you own and run the boat as your own independent charter business. The company just provides a site where you can list your boat's availability (dates, location, etc.) Plus of course, they will "help" you purchase your boat (and collect sales commission, etc.)

[hellosailor]

"you own and run the boat as your own independent charter business."

That's where the IRS used to get very curious and skeptical. And I expect they haven't changed their attitude. If you were the person running it, for your own profit and making your own incidental use of the boat (which might or might not be documented), they'd be much more likely to investigate [read: audit] and hold things against you. Maybe they would look at the web site and say that's "arm's length separation" enough but I suspect a tax attorney would still say "Hire a manager to run the business". And form a corporation, and all that good stuff.

Not that I love red tape but sometimes...

[belizesailor]

Originally Posted by hellosailor

"you own and run the boat as your own independent charter business."
...
That's where the IRS used to get very curious and skeptical...

The IRS and local tax authorities may indeed give more scrutiny to a single vessel which is claimed to be in charter. It used to be pretty common in Florida, not sure about currently, for people to claim a boat was in charter service when it really was not (big tax advantage in FL at the time). Florida cracked down on this and lots of people found themselves paying fines -- relatively large in some cases.

I know because I was in the charter biz there and they reviewed my situation. All my ducks were in a row, the boat really was verifiable in charter service, so no big deal.

The biggest Federal tax advantage to having a boat in charter is depreciation. If you put a nice new boat on a 5-year depreciation schedule that can add up in terms of reducing your taxable income. IRS did not like it when I did that concurrent with "firing" myself and thus dramatically reducing my taxable income -- to the point that they actually owed me money -- for the first time in my life! Their response was to audit me. Again, ducks in a row, good professional accountant representation, no big deal, IRS went home empty handed.

My suggestion is that if you plan to do individual boat charter then really run it as a business, keep good records and use a good accountant, or the tax man may indeed come a knocking.

An advantage to having the boat managed by a charter company is of course that then it is very easy to prove it is really in charter service.

[catlover]

Originally Posted by belizesailor

The IRS and local tax authorities may indeed give more scrutiny to a single vessel which is claimed to be in charter. It used to be pretty common in Florida, not sure about currently, for people to claim a boat was in charter service when it really was not (big tax advantage in FL at the time). Florida cracked down on this and lots of people found themselves paying fines -- relatively large in some cases.

I know because I was in the charter biz there and they reviewed my situation. All my ducks were in a row, the boat really was verifiable in charter service, so no big deal.

The biggest Federal tax advantage to having a boat in charter is depreciation. If you put a nice new boat on a 5-year depreciation schedule that can add up in terms of reducing your taxable income. IRS did not like it when I did that concurrent with "firing" myself and thus dramatically reducing my taxable income -- to the point that they actually owed me money -- for the first time in my life! Their response was to audit me. Again, ducks in a row, good professional accountant representation, no big deal, IRS went home empty handed.

My suggestion is that if you plan to do individual boat charter then really run it as a business, keep good records and use a good accountant, or the tax man may indeed come a knocking.

An advantage to having the boat managed by a charter company is of course that then it is very easy to prove it is really in charter service.

We are in process of setting up boat as a biz. Would you mind sharing the accountant you used? Thanks.

[belizesailor]

PM'ed.