Can I write off my boat or part of it?

[mbgaski]

Re: Can I write off my boat or part of it?

OP's scenario (my understanding of it anyway): Guy has a non-boat related business, and wants to know if he can use boat to help his business so he can have some deductions on his taxes.

I think that's part of the shadiness. The end goal here is not use of the boat to help the business. The stated end goal was to achieve a deduction. I'm not going to question his character over that, but I will say that if you start out thinking about how to achieve a deduction in an of itself, 90% of the time it's not going to fly in the end.

Put it this way, a valid tax deduction will almost always apply towards something that you would be doing regardless of if the deduction was present or not.

IMHO, it's an unwise plan. A lot of the trucks and such that you see carrying business adverts are literally used in those businesses. For instance a lot of construction contractors put them on around here, but that's literally the truck that they'll use to travel from site to site too.

If you find yourself legitimately using your boat for part of your business, then try it. Otherwise, it's not a matter of valid or not, it's just going to be a matter of if they ever audit you.

 

[marcortez]

Re: Can I write off my boat or part of it?

Those are some harsh words for someone who asked a question. In my opinion, your comment is uncalled for. The original poster has not claimed such a deduction, he is just asking about what may be needed to claim such a deduction. I think you should apologize and retract your statement.

He never said no such thing.....he was not asking what qualifies as a business deduction.
He just tossed out "plastering" a decal on his boat... with his business name, with an assumed purpose of taking a "business" deduction and would it benefit him.

Plastering a decal on your boat with the sole intention of taking a "deduction", where no actual "business" expense has occurred, is treading on the fringes of a "tax cheat" and scofflaw.

Hence, no retraction will be forthcoming and, if in fact, the OP's sole intention is to game the system, then it is he who should be apologizing to the those who play by the rules.

 

[109jb]

Re: Can I write off my boat or part of it?

This is a little different from what the original poster was asking about.

Your scenario: Guy wants to make his hobby a business so he can claim the losses from his "business". I agree with you, this is a bad idea. I wouldn't be surprised if the guy never claimed a profit from the "business", but only had losses (seems likely given how small tournament prizes are in relation to the cost of a boat). The IRS is generally suspicious of businesses that never make a profit.

OP's scenario (my understanding of it anyway): Guy has a non-boat related business, and wants to know if he can use boat to help his business so he can have some deductions on his taxes.

Yes it is a bit different, but I have to disagree on one point. From the original post it sounds to me like the original poster wants to find a way to write off his boat hobby through his businesss. In that regard I don't feel it is different. If he has a LEGITIMATE business use for the boat then I agree that he could write off that portion, but legally only that portion. For example, if he entertains prospective clients for 10 hours in a year and he uses the boat a total of 100 hours that year then he can write off 10% of his total annual costs as a business expense. If this is the case then fine, but keeping records to prove the business portion of the use is prudent. If a client never sets foot on his boat or there is no other legitimate business use for the boat then it is a hobby boat and should not be used as a business deduction.

I have friends that do deduct a portion of their toys in their business, but they actually use those toys for work. For example, a friend writes of a portion of the use of his UTV (off-road utility vehicle). However, he uses it in conjunction with his construction business and only writes off the portion that he legitimately uses it for business.

That's my story and I am sticking to it.

 

[security6]

Re: Can I write off my boat or part of it?

Yes it is a bit different, but I have to disagree on one point. From the original post it sounds to me like the original poster wants to find a way to write off his boat hobby through his businesss. In that regard I don't feel it is different. If he has a LEGITIMATE business use for the boat then I agree that he could write off that portion, but legally only that portion. For example, if he entertains prospective clients for 10 hours in a year and he uses the boat a total of 100 hours that year then he can write off 10% of his total annual costs as a business expense. If this is the case then fine, but keeping records to prove the business portion of the use is prudent. If a client never sets foot on his boat or there is no other legitimate business use for the boat then it is a hobby boat and should not be used as a business deduction.

I have friends that do deduct a portion of their toys in their business, but they actually use those toys for work. For example, a friend writes of a portion of the use of his UTV (off-road utility vehicle). However, he uses it in conjunction with his construction business and only writes off the portion that he legitimately uses it for business.

That's my story and I am sticking to it.

Agreed. The key is a legitimate business use, which is not entirely clear from the original post.

 

[security6]

Re: Can I write off my boat or part of it?

He never said no such thing.....he was not asking what qualifies as a business deduction.
He just tossed out "plastering" a decal on his boat... with his business name, with an assumed purpose of taking a "business" deduction and would it benefit him.

Plastering a decal on your boat with the sole intention of taking a "deduction", where no actual "business" expense has occurred, is treading on the fringes of a "tax cheat" and scofflaw.

Hence, no retraction will be forthcoming and, if in fact, the OP's sole intention is to game the system, then it is he who should be apologizing to the those who play by the rules.

We may just have to agree to disagree. Here is the question asked in the original post:

If I plaster my business website on the side of my boat, can I benefit?

I see no harm in asking about the boundaries of the law, and do not consider anyone who wants to know whether he can benefit under a law a "scofflaw" or "tax cheat."

I do agree that it is not legal to put a business decal on a recreational boat, use the boat solely recreationally, and then deduct the entire cost/deprecation of the boat.

My point is that it is not unethical to ask about our tax code or talk about the tax code.

Discussions about the law can help people find ways to further their business while staying inside of the law, so I consider such discussions a good thing. I also think that ordinary citizens being able to understand our laws is a good thing. Part of the learning process is asking questions about whether something is right or wrong (ETA - or legal or illegal). Perhaps you feel differently.

As an example of how the OP could plaster his business on the side of his boat and still take a deduction, I think we would agree that if he plastered his business on the side of the boat and hired an employee to drive the boat near a busy beach for advertising then he would be ok to deduct a portion of the cost/deprecation of the boat. These sorts of discussions often lead to this sort of brainstorming.

 

[hostage]

Re: Can I write off my boat or part of it?

There are some additional considerations.

1) You can only deduct the interest from the loan.

2) The loan must be a secured loan.

3) You can only deduct a maximum of two homes (1 primary, and 1 secondary). If you already have a 2nd house, condo, boat that is already being deducted along with your primary house, then you cannot deduct the interest from a third.

4) The boat must meet the IRS requirements of a "Qualified Home:

Qualified Home: For you to take a home mortgage interest deduction, your debt must be secured by a qualified home. This means your main home or your second home. A home includes a house, condominium, cooperative, mobile home, house trailer, boat, or similar property that has sleeping, cooking, and toilet facilities.

See the following link for IRS rules under Publication 936:

http://www.irs.gov/publications/p936/ar02.html#en_US_publink1000229900

NOTE: Coking facilities must be legitimate. A Magma grill bolted to a handrail or rod holder IS NOT a 'cooking facility'. I had a brother-in-law who tossed a portable camp stove in his galley and called it a 'cooking facility'. This is a grey area I would not want to fight.

I have an enclosed head with a holding tank, a galley with a sink, fridge and stove, 2 permanent berths and a convertable berth. I've verified that I meet the legal IRS requirements. Note: I VERIFIED with my Accountant and Tax Preparer BEFORE I took the deduction on the interest of the loan. The IRS isn't going to buy "Screen name 'SHREW' on www.iboats.com told me it was ok".

Also, I am neither an accoutant nor a licensed tax preparer and this is only one mans opinion. I am not suggesting that anybody try to do this without first verifying by the proper resources. In other words, don't come crying to me if you get audited.

Doh! Forgot I paid it in full! Owell, guess at least I don't have interest payments.

 

[russpang]

Re: Can I write off my boat or part of it?

Wow, I never intended to ruffle so many feathers.

Firstly, thanks to all of you who have given constructive responses. I appreciate it.

I suppose I should explain the reasoning behind my question for those who feel the need to judge me.

Firstly, If I purchased a really sharp highway billboard ad for my business, I could certainly write-off that expense, no? So if I paid $500-$1000 or more to create a really sharp wrap for my boat with my business name on it, why should I not be allowed to deduct that?

Secondly, as a business owner, is it not prudent to always be looking for ways to prosper in my business by saving where I can, deducting what I can and using the tax laws to my benefit??

Am I a scofflaw for soliciting ideas from (as I originally posted) "any of you (who) are accounting-savvy"??

 

[shrew]

Re: Can I write off my boat or part of it?

Wow, I never intended to ruffle so many feathers.

Firstly, thanks to all of you who have given constructive responses. I appreciate it.

I suppose I should explain the reasoning behind my question for those who feel the need to judge me.

Firstly, If I purchased a really sharp highway billboard ad for my business, I could certainly write-off that expense, no? So if I paid $500-$1000 or more to create a really sharp wrap for my boat with my business name on it, why should I not be allowed to deduct that?

Secondly, as a business owner, is it not prudent to always be looking for ways to prosper in my business by saving where I can, deducting what I can and using the tax laws to my benefit??

Am I a scofflaw for soliciting ideas from (as I originally posted) "any of you (who) are accounting-savvy"??

Personally, I respect that you're researching and asking questions. I think it's applaudable. Better to ask a group of folks who might already have gone down the same road to give suggestions for what might work or not work and what the caveats are. Why reinvent the wheel?

I think that there is a significant difference between asking and doing. Asking is innocent (there are no such things as dumb questions), while blindly doing is irresponsible.

Asking if something is doable does not compromise one's integrity. To be a scofflaw is to take action. (Technically scofflaw is "a person who habitually flouts or violates the law, esp one who fails to pay debts or answer summonses. esp. by failing to comply with a law that is difficult to enforce effectively"). To be a scofflaw requires an action.

As with any forum, you're going to get the opinions of the community whether you like them or not. Everyone's entitled to one. (That's my .02)

 

[Beefer]

Re: Can I write off my boat or part of it?

Wow, I never intended to ruffle so many feathers.

...and especially being a Cadet! Lol

Ok, my .02, but I'm not an accountant or anything close... Here in Florida, there are tons of boats that have business wraps. I consider it an advertising billboard, and the cost of the wrap as an advertising expense. I would think there wouldn't be a problem deducting the cost of the wrap. Now one could argue that each time the boat is being used, they are doing so to promote the business. Would that be deductible? I think if it could be proven that the boat was being used strictly for advertising purposes (not fishing, or tubing, or skiing, or any other activity), then you might have a chance.

Of course you really would want to have your accountant advise you, but I think at the very least, the wrap would be deductible. It would be an easier task if the boat was titled and registered to the business, and not to an individual.

But what do I know...

 

[180Fisherman]

Re: Can I write off my boat or part of it?

Sometimes you have to take the advice around here with a grain of salt. There is a large group of people on this forum that will tell you that you and your family will die a horrible death if you put a 100hp outboard on a boat only rated for 90.

A problem with consulting with an accountant is that they will always err on the side of caution and rarely if ever are willing to be creative when it comes to tax preparation

 

[Lion hunter]

Re: Can I write off my boat or part of it?

The billboard analogy is humorous to me. Quite a while back when I lived in AZ the county put a moratorium on billboard construction in an attempt to beautify highways. The result was people started parking tractor trailer rigs along the highway on their private ground with stuff painted all over them to advertise. Made the place uglier than heck.

Way off subject, I digress.

Anyhow the keyword here is legitimate business expense. If you have ever filled out a survey at a business on how you heard about them, they are doing that to determine where to focus their advertising monies. So, if you can determine that people use your services do to the advertising that is posted on your boat then I think you have a very good case for a write off.

 

[mbgaski]

Re: Can I write off my boat or part of it?

The billboard analogy is humorous to me. Quite a while back when I lived in AZ the county put a moratorium on billboard construction in an attempt to beautify highways. The result was people started parking tractor trailer rigs along the highway on their private ground with stuff painted all over them to advertise. Made the place uglier than heck.

The county will catch on soon enough. I work for the county that I live in too - one of my duties is administrating the code violation software, so I end up pretty involved in that area.

In our case (I know b/c we've done it with trailers), anything like that would be legally considered a sign. If placed next to the road without a sign permit attached (and we wouldn't issue one to a trailer or tractor), they can be ticketed.