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#11
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New tax deductions for sailors?
Treating your boat as a second home has been legit for a while. It has to
have a toilet and stove I believe. Or maybe you are hearing about something for professional sailors aka merchant marines? "Jenny MacLeod" wrote in message .. . Hello, This is my first posting, and I'm not too savvy, so please excuse me if I ask a stupid question. One of the guys I dock near said he read that there are some new laws this year that make it possible for sailors to deduct a lot of equipment from their taxes. Is this true? Where can I find out more about this? That would be great, since I purchased my first boat this year. I'm getting all of my paperwork together in preparation for filing on the first day possible, which, according to the TaxBrain site, is Jan. 16, just a week away. Yours truly, Jenny Mac |
#12
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New tax deductions for sailors?
On Mon, 12 Jan 2004 21:43:30 GMT, felton wrote:
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. I've been showing a net loss on my Schedule C for nine years now. I've never been questioned--and I am in a category that is more at risk for audit than many. 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. Yep! Interesting word, "intent." I think the key aspect to doing this successfully is to generate income from the boat with some degree of regularity. In my case, I show at least some revenue almost every month of the year. 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. The dodge here is that, as the owner of a charter boat, there are certain times that I have to sea test the boat, to be sure it is in good condition. I have never been questioned about my personal use of the boat--and, so far as I am aware, neither has anyone else at this particular charter operator. 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. I have no loan on the boat. In a typical year it generates enough income to pay maintenance and replacements. The pre-tax cash flow has been around a break even for every year I've owned it. Since I run out of depreciation this year, I will exchange into a larger boat--probably a Catalina 320. That transaction will qualify as a tax deferred exchange under §1031. As an aside, how is the cost of your insurance? It's around $650 a year with $1 million liability and $500 deductible. If a charter skipper has a claim, he (or she) agrees to pay the deductible. It's only happened once in ten years. 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 There are good and bad points for both. Joe Parsons |
#13
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New tax deductions for sailors?
I can't get away with that, mine's 24 years old.
Eric "Jonathan Ganz" wrote in message ... It depends on you to sail it. Got it. "Scott Vernon" wrote in message ... I list my boat as a dependent. Scotty "Jenny MacLeod" wrote in message .. . Hello, This is my first posting, and I'm not too savvy, so please excuse me if I ask a stupid question. One of the guys I dock near said he read that there are some new laws this year that make it possible for sailors to deduct a lot of equipment from their taxes. Is this true? Where can I find out more about this? That would be great, since I purchased my first boat this year. I'm getting all of my paperwork together in preparation for filing on the first day possible, which, according to the TaxBrain site, is Jan. 16, just a week away. Yours truly, Jenny Mac |
#14
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New tax deductions for sailors?
Mine is approaching 40 years old.
"Eric" wrote in message om... I can't get away with that, mine's 24 years old. Eric "Jonathan Ganz" wrote in message ... It depends on you to sail it. Got it. "Scott Vernon" wrote in message ... I list my boat as a dependent. Scotty "Jenny MacLeod" wrote in message .. . Hello, This is my first posting, and I'm not too savvy, so please excuse me if I ask a stupid question. One of the guys I dock near said he read that there are some new laws this year that make it possible for sailors to deduct a lot of equipment from their taxes. Is this true? Where can I find out more about this? That would be great, since I purchased my first boat this year. I'm getting all of my paperwork together in preparation for filing on the first day possible, which, according to the TaxBrain site, is Jan. 16, just a week away. Yours truly, Jenny Mac |
#15
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New tax deductions for sailors?
Eric stated: I can't get away with that, mine's 24 years old.
Declare it disabled. --=20 katysails s/v Chanteuse Kirie Elite 32 http://katysails.tripod.com "Women and cats will do as they please, and men and dogs should relax and get used to the idea." - Robert A. Heinlein |
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