In article . net,
Maxprop wrote:
I've done the math, Jon. You'll realize I speak with non-forked tongue if
you do the math yourself. There is NEVER a good reason to finance a
depreciating asset, especially one not used for making money, if you have
the cash to buy it outright.

It's just not true. Besides, as soon as someone uses the word "never"
in an argument like this, it usually means that there is no such
absolute.

I'm purdy good with dem numbers also.

--
"j" ganz @@
www.sailnow.com

"Jonathan Ganz" wrote in message
...
In article . net,
Maxprop wrote:
I've done the math, Jon. You'll realize I speak with non-forked tongue if
you do the math yourself. There is NEVER a good reason to finance a
depreciating asset, especially one not used for making money, if you have
the cash to buy it outright.

It's just not true. Besides, as soon as someone uses the word "never"
in an argument like this, it usually means that there is no such
absolute.

I'm purdy good with dem numbers also.

Fine. Let's calculate an example. Let's say that a Beneteau 35s5 is going
for $64k and you have a down payment of 10%. Show me how you are going to
save money, or at least not lose any, by financing the boat. We'll assume
you have sufficient money in relatively liquid assets to purchase the boat
outright.

I'm waiting.

Max

In article et,
Maxprop wrote:
Fine. Let's calculate an example. Let's say that a Beneteau 35s5 is going
for $64k and you have a down payment of 10%. Show me how you are going to
save money, or at least not lose any, by financing the boat. We'll assume
you have sufficient money in relatively liquid assets to purchase the boat
outright.

I'm waiting.

Changing numbers to something more realistic....

$20K buy + $5K fix-it money from an equity loan of ~5%.

Slip fee: $400/mo (probably a bit high)

Misc/Insurance: $200/mo (way high in my opinion)

Payment on loan about $200/mo.

Tax benefit ... well, that's proprietary, but basically, it's a
percentage of the slip fee, misc, loan paymnet, and the right-off from
the depreciating asset over time. Also, I don't have to rent or borrow
a boat to get my sea time and keep my license active, and I can make
money (although not a lot) per month, say $300 - average over 12 mos.)

Cost to rent a condo, so I can be near clients: $1200/mo (low estimate)
Cost to buy a condo, 10% down on $450K, since I don't have $450K
sitting around (and that's way low) plus monthly mortgage of $1500
(guestimate) plus boat rental so I can really lose money $300/outing.

Perhaps you see where this is going.

Sure, I could just pay cash, but then, since I don't have a bottomless
pit of cash, I might be a bit short if something interesting, like
another house, comes up for sale. For that, I would put down 20%,
finance the rest, and have break-even or (like now) slightly positive
cash flow.

Bottom line... the cash flow is much better. Thus, it's a better deal
to finance the boat.

Well, I've left out a lot. I'm sure you can pick it apart if you try.






--
"j" ganz @@
www.sailnow.com

"Jonathan Ganz" wrote in message
...
In article et,
Maxprop wrote:
Fine. Let's calculate an example. Let's say that a Beneteau 35s5 is
going
for $64k and you have a down payment of 10%. Show me how you are going to
save money, or at least not lose any, by financing the boat. We'll assume
you have sufficient money in relatively liquid assets to purchase the boat
outright.

I'm waiting.

Changing numbers to something more realistic....

$20K buy + $5K fix-it money from an equity loan of ~5%.

Slip fee: $400/mo (probably a bit high)

Misc/Insurance: $200/mo (way high in my opinion)

Payment on loan about $200/mo.

Tax benefit ... well, that's proprietary, but basically, it's a
percentage of the slip fee, misc, loan paymnet, and the right-off from
the depreciating asset over time.

I hope you don't get audited, Jon. Federal law allows you to write-off the
interest on such a loan. But the slip fee? Total loan payment?
Depreciation? Unless you're using the boat as a business, you're in deep.

Also, I don't have to rent or borrow
a boat to get my sea time and keep my license active, and I can make
money (although not a lot) per month, say $300 - average over 12 mos.)

Doing what? Floating bordello? I suppose that might work.


Cost to rent a condo, so I can be near clients: $1200/mo (low estimate)
Cost to buy a condo, 10% down on $450K, since I don't have $450K
sitting around (and that's way low) plus monthly mortgage of $1500
(guestimate) plus boat rental so I can really lose money $300/outing.

Once again, the IRS might like to have a chat with you. You must show a
profit within five years or the write-offs become retroactively taxable.

Perhaps you see where this is going.

Sure, I could just pay cash, but then, since I don't have a bottomless
pit of cash, I might be a bit short if something interesting, like
another house, comes up for sale. For that, I would put down 20%,
finance the rest, and have break-even or (like now) slightly positive
cash flow.

Fergeddit. No one can afford Bay Area real estate any longer. g


Bottom line... the cash flow is much better. Thus, it's a better deal
to finance the boat.

Well, I've left out a lot. I'm sure you can pick it apart if you try.

If you'd simply bought the boat, your cash flow would have been positive.
With your calculations, it couldn't possibly be. Fact: the interest you
pay on a boat loan will always exceed the tax savings possible by writing
off the interest expense.

But to cut to the chase, we were talking about boats used for recreation,
not for business. If you can legitimately use yours for business, more
power to ya. Most of us either can't or wish to risk an audit every other
year. The IRS just loves it when folks write-off boats as a business
expense. The old rule was generally thus: the very rich can write-off very
expensive boats, at least in part, as business expenses, but the rest of us
cannot write off our small craft unless we are in the charter business. If
you do what you claim above, you'll doubtlessly be audited sometime down the
road. Hope your documentation is in order.

Max

"Maxprop" wrote in message
ink.net...

"Jonathan Ganz" wrote in message
...
In article et,
Maxprop wrote:
Fine. Let's calculate an example. Let's say that a Beneteau 35s5 is
going
for $64k and you have a down payment of 10%. Show me how you are going
to
save money, or at least not lose any, by financing the boat. We'll
assume
you have sufficient money in relatively liquid assets to purchase the
boat
outright.

I'm waiting.

Changing numbers to something more realistic....

$20K buy + $5K fix-it money from an equity loan of ~5%.

Slip fee: $400/mo (probably a bit high)

Misc/Insurance: $200/mo (way high in my opinion)

Payment on loan about $200/mo.

Tax benefit ... well, that's proprietary, but basically, it's a
percentage of the slip fee, misc, loan paymnet, and the right-off from
the depreciating asset over time.

I hope you don't get audited, Jon. Federal law allows you to write-off
the interest on such a loan. But the slip fee? Total loan payment?
Depreciation? Unless you're using the boat as a business, you're in deep.

Well, duhh... if you read just a little bit further, you would see that I
will be...

Also, I don't have to rent or borrow
a boat to get my sea time and keep my license active, and I can make
money (although not a lot) per month, say $300 - average over 12 mos.)

Doing what? Floating bordello? I suppose that might work.


I would say that would be your experience, but you aren't up for it.

Cost to rent a condo, so I can be near clients: $1200/mo (low estimate)
Cost to buy a condo, 10% down on $450K, since I don't have $450K
sitting around (and that's way low) plus monthly mortgage of $1500
(guestimate) plus boat rental so I can really lose money $300/outing.

Once again, the IRS might like to have a chat with you. You must show a
profit within five years or the write-offs become retroactively taxable.

NO. Totally incorrect. There is no law nor IRS ruling that says I have to
make a profit. If I can show that I've made a good faith effort to make a
profit, that's all that's required. Suggestion: keep your day job.

Perhaps you see where this is going.

Sure, I could just pay cash, but then, since I don't have a bottomless
pit of cash, I might be a bit short if something interesting, like
another house, comes up for sale. For that, I would put down 20%,
finance the rest, and have break-even or (like now) slightly positive
cash flow.

Fergeddit. No one can afford Bay Area real estate any longer. g

I can, have, and will.


Bottom line... the cash flow is much better. Thus, it's a better deal
to finance the boat.

Well, I've left out a lot. I'm sure you can pick it apart if you try.

If you'd simply bought the boat, your cash flow would have been positive.
With your calculations, it couldn't possibly be. Fact: the interest you
pay on a boat loan will always exceed the tax savings possible by writing
off the interest expense.

Huh? That's a negative cash flow of $25K all at once!

But to cut to the chase, we were talking about boats used for recreation,
not for business. If you can legitimately use yours for business, more
power to ya. Most of us either can't or wish to risk an audit every other
year. The IRS just loves it when folks write-off boats as a business
expense. The old rule was generally thus: the very rich can write-off
very expensive boats, at least in part, as business expenses, but the rest
of us cannot write off our small craft unless we are in the charter
business. If you do what you claim above, you'll doubtlessly be audited
sometime down the road. Hope your documentation is in order.

You said NEVER buddy. The answer is not never. In addition, there is nothing
wrong with having a deduction as a second home on a boat. You're required to
have sleeping accomodations, a working head, and cooking facilities. And,
that has nothing to do with a commercial venture.

Sheesh. I'm sure glad you aren't my accountant!

"Capt. JG" wrote in message
...
"Maxprop" wrote in message
ink.net...

Once again, the IRS might like to have a chat with you. You must show a
profit within five years or the write-offs become retroactively taxable.


NO. Totally incorrect. There is no law nor IRS ruling that says I have to
make a profit. If I can show that I've made a good faith effort to make a
profit, that's all that's required. Suggestion: keep your day job.

You'd be well advised to check that out, John. According to the Uniform Tax
Code of the IRS, you have five years to make a profit, after which your
business is no longer considered a business. Got a good lawyer?

Fergeddit. No one can afford Bay Area real estate any longer. g

I can, have, and will.

Did you miss the smiley face, Jon? There are always investments in real
estate everywhere and in all price ranges, but I'm betting you can't afford
the ones that will give your the rate of return you need to offset the
interest on a boat loan.

Bottom line... the cash flow is much better. Thus, it's a better deal
to finance the boat.

Well, I've left out a lot. I'm sure you can pick it apart if you try.

If you'd simply bought the boat, your cash flow would have been positive.
With your calculations, it couldn't possibly be. Fact: the interest you
pay on a boat loan will always exceed the tax savings possible by writing
off the interest expense.

Huh? That's a negative cash flow of $25K all at once!

Get a job in the real world, Jon. Of course it is. Every time a business
buys something, it's a negative cash flow. Are you claiming that you only
have a positive cash flow? Constantly? Just a few paragraphs ago you claim
that an indefinite net loss is fine with the IRS, but now you're decrying a
negative cash flow. Which is it?


But to cut to the chase, we were talking about boats used for recreation,
not for business. If you can legitimately use yours for business, more
power to ya. Most of us either can't or wish to risk an audit every
other year. The IRS just loves it when folks write-off boats as a
business expense. The old rule was generally thus: the very rich can
write-off very expensive boats, at least in part, as business expenses,
but the rest of us cannot write off our small craft unless we are in the
charter business. If you do what you claim above, you'll doubtlessly be
audited sometime down the road. Hope your documentation is in order.

You said NEVER buddy. The answer is not never. In addition, there is
nothing wrong with having a deduction as a second home on a boat. You're
required to have sleeping accomodations, a working head, and cooking
facilities. And, that has nothing to do with a commercial venture.

But only the interest on the loan can be written off, not the entire
payment, the dock fee, and the other things you claim to write off.

Sheesh. I'm sure glad you aren't my accountant!

I'll bet yours will be Bubba's roommate at Leavenworth, if its he who's been
advising you.

Max

I'll bet yours will be Bubba's roommate at Leavenworth, if its he who's
been
advising you.

Bubba did quite well and now owns this Tayana 48 I sail on!

http://members.aol.com/bobsprit/images/atayb.jpg

RB
35s5
NY

"Maxprop" wrote in message
nk.net...

"Capt. JG" wrote in message
...
"Maxprop" wrote in message
ink.net...

Once again, the IRS might like to have a chat with you. You must show a
profit within five years or the write-offs become retroactively taxable.


NO. Totally incorrect. There is no law nor IRS ruling that says I have to
make a profit. If I can show that I've made a good faith effort to make a
profit, that's all that's required. Suggestion: keep your day job.

You'd be well advised to check that out, John. According to the Uniform
Tax Code of the IRS, you have five years to make a profit, after which
your business is no longer considered a business. Got a good lawyer?

It's just not true Max. They may consider it a hobby, but if I can show that
it's an ongoing business, there's nothing they can do. My father, for
example, had a paper loss for 14 years in a row. Of course, they audited
him, but he won every time. After the third audit, he told them they would
be liable for his expenses, and on the fourth audit, he collected from them.

Very good lawyer actually. Even better CPA. g

Fergeddit. No one can afford Bay Area real estate any longer. g

I can, have, and will.

Did you miss the smiley face, Jon? There are always investments in real
estate everywhere and in all price ranges, but I'm betting you can't
afford the ones that will give your the rate of return you need to offset
the interest on a boat loan.

Don't take that bet. I don't need the money. I have a good strategy for
rates of return, but thanks for your concern. g (Didn't miss it, btw)


Bottom line... the cash flow is much better. Thus, it's a better deal
to finance the boat.

Well, I've left out a lot. I'm sure you can pick it apart if you try.

If you'd simply bought the boat, your cash flow would have been
positive. With your calculations, it couldn't possibly be. Fact: the
interest you pay on a boat loan will always exceed the tax savings
possible by writing off the interest expense.

Huh? That's a negative cash flow of $25K all at once!

Get a job in the real world, Jon. Of course it is. Every time a business
buys something, it's a negative cash flow. Are you claiming that you only
have a positive cash flow? Constantly? Just a few paragraphs ago you
claim that an indefinite net loss is fine with the IRS, but now you're
decrying a negative cash flow. Which is it?

I never claimed that. What I'm saying is that a huge negative of $25K is
dumb if I don't have to do it.


But to cut to the chase, we were talking about boats used for
recreation, not for business. If you can legitimately use yours for
business, more power to ya. Most of us either can't or wish to risk an
audit every other year. The IRS just loves it when folks write-off
boats as a business expense. The old rule was generally thus: the very
rich can write-off very expensive boats, at least in part, as business
expenses, but the rest of us cannot write off our small craft unless we
are in the charter business. If you do what you claim above, you'll
doubtlessly be audited sometime down the road. Hope your documentation
is in order.

You said NEVER buddy. The answer is not never. In addition, there is
nothing wrong with having a deduction as a second home on a boat. You're
required to have sleeping accomodations, a working head, and cooking
facilities. And, that has nothing to do with a commercial venture.

But only the interest on the loan can be written off, not the entire
payment, the dock fee, and the other things you claim to write off.

Of course.. interest on the loan can be written off. A sizeable portion of
the other expenses can be written off as business expenses. I could use the
boat 50% as a vacation home 50% as a business. There's nothing wrong with
that at all.

Sheesh. I'm sure glad you aren't my accountant!

I'll bet yours will be Bubba's roommate at Leavenworth, if its he who's
been advising you.

I like my privacy. A private suite would be more to my liking. g

How about if I put my company name on my saild, can I count that as a
deduction?
The cost of a new sail?

SV

I'm not sure what a saild is, but it could be a deduction if you entertain
customers on it. g

--
"j" ganz @@
www.sailnow.com

"Scotty" wrote in message
oups.com...
How about if I put my company name on my saild, can I count that as a
deduction?
The cost of a new sail?

SV