Joe...

here is a link to what I believe to be a fairly accurate summary of
the current tax provisions relating to charter boats.

http://www.sailonline.com/html/Boat%...ssion_faq.html

Even assuming that you can justify "active participation", which takes
you to Schedule C, rather than the rental activity, it still seems to
me that there is not much liklihood of generating more deductions than
the amount of the income reported. You would then be faced with the
"hobby loss" provisions, which require you to show a profit or at
least the intent to make a profit. If you are using the boat more
than 14 days a year, you are required to allocate your expenses
between personal (nondeductible) and business. You can't deduct them
all if you are using the boat more than the allowed minimum.

I have no idea what your numbers look like, but I have always viewed
charter operations as a way to defray the costs of boat ownership, by
making a certain amount of income which, hopefully, covers most of the
costs of maintenance, etc. Generally, that income would be offset by
the amount of the expenses that can be claimed. If you are generating
net losses that you are using to offset other income, you are probably
at-risk in the case of an audit.

As an aside, how is the cost of your insurance? Liability insurance
on charter boats was out the roof when I had my old boat in a charter
program. I agree with you about the quality of charter operations,
though. I wasn't blessed with one that was looking after my
interests, but seemed more interested in making the charterers happy
by never charging them for things that they broke or came up missing.
I much prefer my simple life of sole ownership