Helia 44: Buy as a business?

[DtM]

Hook up with JayCall !!! He seems to be across this and is giving good (free) advice that you should take care and treatthe claims with reservation.

[Ram]

Originally Posted by JayCall

As a tax attorney who has dealt with this and similar programs, fid a very good tax lawyer and explore the tax claims very carefully. Your ownership is a "Passive Activity" within the Tax Code and, as such, the ability to deduct losses is quite limited. In general, in the best of circumstances and depending on your personal tax situation, the maximum amount deductible as a loss is limited to $25,000 annually. If you have a substantial Adjusted Gross Income, this amount will decrease, if your AGI is $250K or more, the deduction disappears. Take any tax claims with a very large chunk of salt and have a good tax advisor examine them carefully in light of your personal tax situation.

What you are saying seems to be in line with what my CPA is advising me, my boat is now 6 years old , I bought it new and so far so good, on my taxes-

[onthehook17]

My wife and I own the Helia 44, Let It Be, that is currently in the TMM fleet in Tortola. I have had many of the questions and thoughts that are brought out in this thread. We did set up an LLC and have put many more than 100 hours into the business just in this year alone.
We have a high AGI, a very competent accountant, plan to be an active participant in the business, and so far we do not regret our decision. We do not expect to get a "free" boat out of the deal, no way. In fact we will barely make out expenses plus depreciation cost. The boat will be worth a little more than 2/3's of purchase price in 3 years and 1/2 in 5 years. When the boat is finished in it's charter life, if you want to keep the boat and go blue water cruising you will have significant cost to refit the boat for it's new life.
I too saw the Helia at the Annapolis show for the first time and started the boat buying discussion with Bay Yacht. I am very glad I did not make a deposit and went elsewhere. Bay Yacht numbers just are not accurate in almost any way. This seems to be echoed by other people on this forum.
I ended up buying from TMM and have been very happy up to this point in time. Only the future will tell how everything works out. We go to Tortola in about 2 weeks to check it all out and step aboard.

[MNLandLoc]

OnTheHook, I am curious about the process that led you to TMM? It seems one of the boat buying challenges is to find a good dealer that you can work with. How did you end up with them?

[marcf]

I have been looking at the Bay Yacht program and spoke to them at the Miami boat show. Looks like Florida Yacht Group has a similar program - Florida Yacht Charters & Sales: Boat as a Business Ownership Plans . Don't know how Florida Yacht compares to Bay Yacht, but I think I have concluded that unless you have consistently high enough income to really take advantage of the tax savings, and can get comfortable that you can met the IRS requirements, then is does not make sense. At least for me, when comparing that to buying a used boat in a few years.

[vida nueva]

Originally Posted by JayCall

As a tax attorney who has dealt with this and similar programs, fid a very good tax lawyer and explore the tax claims very carefully. Your ownership is a "Passive Activity" within the Tax Code and, as such, the ability to deduct losses is quite limited. In general, in the best of circumstances and depending on your personal tax situation, the maximum amount deductible as a loss is limited to $25,000 annually. If you have a substantial Adjusted Gross Income, this amount will decrease, if your AGI is $250K or more, the deduction disappears. Take any tax claims with a very large chunk of salt and have a good tax advisor examine them carefully in light of your personal tax situation.

This checks with what I learned talking to a tax attorney as well.

[hazelrock]

How about buying a boat yourself & then 'leasing' it to an agency for rental management?

[Bobby L]

Good Morning,

I am wondering if anybody can help me in regards to the "boat as a business" program. I've contracted to buy a nice 40' cat with the assumption that I can run a small LLC operation. Can I use the Bonus Depreciation? Can I count on charter operations to help me? Please let me know if you have had success or disappointments.

[leftbrainstuff]

Originally Posted by Bobby L

Good Morning,

I am wondering if anybody can help me in regards to the "boat as a business" program. I've contracted to buy a nice 40' cat with the assumption that I can run a small LLC operation. Can I use the Bonus Depreciation? Can I count on charter operations to help me? Please let me know if you have had success or disappointments.

Tax agencies tend to view a hobby and a business very differently.

You will need to get very specific tax advice for your nationality, tax treaty obligations, personal circumstances and location of the vessel.

Sent from my SM-N900T using Cruisers Sailing Forum mobile app

[ZipTie]

Bobby L

"boat as a business" is for people with DEEEEEEEP pockets.
Do your homework as you will find more money goes out than comes in even with all the right offs.

People that have been "Taken" will never tell you the real story.

[ozskipper]

"How to make a million dollars in the boating business? Start with 2 Million!!"

That saying has been around for a long time and with good reason. Many (not all) small business ventures in the boating charter game are primarily lifestyle choices, not money making schemes..

Of course, yours isnt a money making scheme, rather a cost offset scheme. While tax systems will vary a lot, I remember my old doctor doing what you are thinking of. In the last year of the boats charter life, he started accumulating new "toys" for the boat. Offshore clothing, Electronics and other fancy things. This gave him a substantial tax benefit in that year and gave him a boat full of new toys when the time came to get it to himself.

The best person to speak to will be your accountant.

[valhalla360]

Originally Posted by Bobby L

Good Morning,

I am wondering if anybody can help me in regards to the "boat as a business" program. I've contracted to buy a nice 40' cat with the assumption that I can run a small LLC operation. Can I use the Bonus Depreciation? Can I count on charter operations to help me? Please let me know if you have had success or disappointments.

Sure it can "help". If your buddy throws a quarter on the bar, he "helped" with the $200 bar bill.

The problem is if you don't show a profit on a somewhat regular basis, the IRS calls it a hobby and your deductions are limited to your income. There are a lot of other complications so talk to a qualified tax guy as you are talking big enough dollars to interest the IRS if you mess up.

[Sail power sail]

I am a cpa. JayCall's advice is right. The structures I have looked at do not work.

Sent from my SAMSUNG-SM-N910A using Cruisers Sailing Forum mobile app

[DotDun]

A boat can be put into a money making business and used as a write off. But the business still needs to make money. A business that only loses money isn't sustainable.