I spent 5 years doing tax in Public Accounting, not to be a carrier tax accountant, but to learn how to dance around the IRS with my real estate business. My conclusion, "Pigs get fed and hogs get slaughtered"!!
Most people in your situation charter
. Shad Khan charters his new 308' yacht and almost breaks even for the year, with two charters to Russians per year. Is there money
in that business, after loosing $100,000,000 when he sells the boat
? In his case, who cares when he's got to find a way to consume $750,000,000 per year.
Which brings me to an alternative you might consider. The bigger the boat you get, the more crew you need to operate it. The bigger the crew you need, the more that you've put yourself right back into what you're trying to get away from - employees and management!!
Jimmy Buffet just bought a new sailboat and shrunk down to just 44'. Why, because he can handle it alone. No Crew Needed!
For me personally, I side with Jimmy. Pay cash, forget deductions, keep the boat small enough that the deductions are not financially material and MOST IMPORTANT, you can handle the boat alone.
I like your choice of boat though. I've had my Lagoon
for over 10 years and love it. It's plenty of room for me, wife and child, with a stateroom left over. However, we use the boat to get away from people and employees.
The only deduction I've ever taken was for the sales tax when I bought it. My hobby is sailing - the first test applied by the IRS. If you loose money with your hobby - you are disallowed any deduction, arms length charter
business excepted. Another issue for you to consider are the "related party" transactions you mentioned. Your Board, IRS and SEC love dissecting those!
One huge benefit we enjoy with our smaller boat is the IntraCoastal Waterway (ICW), stretching from Key West
to NJ!! The Lagoon 380
is the only Lagoon
with a mast
short enough to use the ICW
. Unless of course you chop the mast
On our way south, we've sailed 10 knots down the ICW
, with a Northeaster blowing 25 knots from Titusville to Sebastian, with 2' swells. The boats you mentioned would have to be outside, pounding 12' to 15' seas head
on into the Gulf Stream
. Breaking stuff and someone punching you in the stomach repeatedly the entire way!! While we've stopped at a waterfront restaurant for brunch or sitting on the hook looking at a neighbor in their $6+ mill home!
A thorough evaluation of your needs and wants should be done, hopefully excluding ego, because all boats have pluses and minuses to be considered. We Americans always think that bigger is better. Who else puts a V-8 engine
in a motorcycle?? However, once you own one, you'll go back to a Harley.