Tax Writeoffs for Sat phone/data usage

[bajacch]

Hello All,
I was wondering if US citizens can writeoff the cost of satellite phone calls and data usage if they work from their vessel while cruising? Has anyone done this before? I work from home. I am at a point where I can either buy a nice catamaran and cruise or buy a home. I am leaning towards a catamaran. (Lagoon 560!) I have checked out the cost of satellite communications and if I could write off the usage the initial investment would not be that bad.

[Auspicious]

IANAL. The operating costs are a deduction as a business expense. Personal use would have to be accounted for. I suspect that the initial investment would have to be depreciated over time. IRS might well look at the purchase as a capital cost (depreciate) vice an operating expense.

[Waterway Guide]

I agree with Auspicious. And keep in mind that unusual expenses are red flags for the IRS. If you have significant business you might be better off incorporating and keeping these items separate, but that adds it's own hassles (the liability limits may make it worth it, though, depending on what you're doing for business.

[osirissail]

To be deductible the item needs to be used as part of a business - and - the deduction is, as others mentioned - a business expense that reduces your taxable business income. If you don't have any profits the deduction is not worth much. The IRS has qualifications as to whether a "business" is legitimate or "hobby." There are also limits on the number of times (years) you can run "losses" from the business.

Be very careful when taking advantage of "deductions" from a home based business. There are tax implications that will affect what will happen tax-wise when you sell your house. Likewise, declaring your boat a business when it really isn't has been in the IRS's gun sights for a number of years.

From personal experience over the years I have found it less complicated to just keep homes and stuff separated from your "business." It makes things a lot easier later when it comes time to sell the house, boat, whatever.