BoatBanter.com - Donna Lange runs aground

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Donna Lange runs aground

In article ,
says...
On Sun, 28 Jan 2007 09:30:34 -0800, Mark Borgerson
said:

You can't deduct more expenses than you
have income from the business.

What is your basis for that conclusion?

The fact that the IRS has a "Hobby Loss" segment in the tax code.
You generally have to make a profit 3 years out of 5 in order to
for the IRS to consider it a 'for profit' business.

http://www.wwwebtax.com/deductions_z...bby_losses.htm

"If you lose money pursuing a hobby, you cannot deduct your hobby loss
from your other income on your tax return, but you can deduct your
expenses up to the amount of your hobby income on your tax return. A
hobby loss is a miscellaneous tax deduction on your tax return, though,
and limited by the 2% of AGI threshold."

If the sailing sponsorship is your only source of income, you may
be able to declare a net operating loss, or even deduct the losses
against other income. But you still may have to meet the 3 out of
5 profitable years to avoid the business being considered a hobby.

http://taxes.about.com/od/taxplanning/a/freelance_5.htm

"Hobby Loss Rule of Thumb. If a business reports a net profit in at
least 3 out of 5 years, it is presumed to be a for-profit business. If a
business reports a net loss in more than 2 out of 5 years, it is
presumed to be a not-for-profit hobby.

This rule of thumb places a huge burden of proof on newly formed
businesses. On the one hand, the IRS expects new businesses to incur a
loss. It is normal for a business to have a year or two of losses before
becoming profitable. On the other hand, it is likely that a business
could have several years of losses before ever making a profit. In fact,
several such cases have been sent to the Tax Court. "

So if you don't think the income will exceed the expenses, you should
probably settle for deducting only as much expense as you have
income.

Mark Borgerson

Donna Lange runs aground

In article ,
Jere Lull wrote:

(okay, there may be technical
exceptions, but it's tough to send a bill to someone who is 5000 miles
away.)

It is easy to send the Bill, to the Registered Address, what is hard to
do, is get them to PAY IT.........

Donna Lange runs aground

In article ,
Dave wrote:

On Tue, 30 Jan 2007 01:57:40 GMT, "NE Sailboat" said:

Prior to the mid 1980's ,, one could decuct the interest on a yacht loan.
But,, that ended. And, of course; right after that the sailboat business
went down the drain.

Sorry, but that's simply wrong as the question was posed. If the boat
qualifies as a second or vacation home the interest may still be deductible.
See IRS Publication 527.

Qualifies even more if it's their primary residence ;-)

--
Jere Lull
Xan-a-Deux ('73 Tanzer 28 #4 out of Tolchester, MD)
Xan's NEW Pages: http://web.mac.com/jerelull/iWeb/Xan/
Our BVI FAQs (290+ pics) http://homepage.mac.com/jerelull/BVI/

Donna Lange runs aground

On Jan 29, 5:57 pm, "NE Sailboat" wrote:
Prior to the mid 1980's ,, one could decuct the interest on a yacht loan.
But,, that ended. And, of course; right after that the sailboat business
went down the drain.

There are ways around this, of course. If you rent out your boat then you
can take a depreciation etc.

Similar to owning any rental property.

I believe the boat as a rental would come under the passage investment rules
of the IRS.. might be wrong there, though.

It isn't a very good idea as far as I am concerned. The boat would need to
be insured as a charter boat,, that must cost a fortune.

===="KLC Lewis" wrote in message

et...

"Mark Borgerson" wrote in message
t.net...
In article ,
says...
On Sun, 28 Jan 2007 20:27:00 -0800, Mark Borgerson

said:

You can't deduct more expenses than you
have income from the business.

What is your basis for that conclusion?

The fact that the IRS has a "Hobby Loss" segment in the tax code.

On the assumption that you won't turn a profit sufficient to meet the
test,
I'll accept that. But not the general proposition that you can't in any
year
deduct more expenses than you have income from a business.

My original response wasn't very clear. I should have said that you
can't deduct more expense than income on a continuing basis. After a
few years (two or more depending on the quality of your lawyers), the
IRS will consider the enterprise a hobby rather than a for-profit
business and your deductions will be limited to the amount of income.

Don't know about the States, but in Canada all you have to do is
incorporate
a holding company (less than $1000) and have the company own the boat
and rent it
back to you . . . then the company can deduct interest, depreciation,
repairs
and maintenance, etc. Of course, it isn't quite as simple as that,
but it can be
very cost effective if you look into it and do it properly . . .

Trish

If there was an easy way to make all boat expenses deductible, someone
would have written the book by now!

Am I correct in assuming that you could still deduct monthly loan
payments if the boat qualifies as a primary or secondary residence?
That won't help with operating expenses, though.

Mark Borgerson

If the boat qualifies as a second home, I believe that you can deduct the
*interest* paid on it during the year -- but not principle.- Hide quoted text -

- Show quoted text -

Donna Lange runs aground

Dave ,, why do you refer to smart business practices as a "scam"?

There is nothing wrong with trying to avoid taxes. In fact, when it comes
to boats .. I think it is crazy not to avoid taxes.

What does the state do with all the sales taxes it collects from the poor
boaters? Does it use this money to improve the harbors? Or add docking
areas? Nope, it takes this money and ****es it down the drain. Some fat
ass crook will get the money.

Screw that.

If the government is so concerned with collecting taxes, why does it let
corporations such as Canival Cruise Line operate here almost exclusively yet
have all their boats registered offshore?

Scam? The scam is the government. This country is so corrupt that someday
soon, there will be some type of rebellion.

"Dave" wrote in message
...
On 30 Jan 2007 16:45:34 -0800, "Trish" said:

Don't know about the States, but in Canada all you have to do is
incorporate
a holding company (less than $1000) and have the company own the boat
and rent it
back to you . . . then the company can deduct interest, depreciation,
repairs
and maintenance, etc. Of course, it isn't quite as simple as that,
but it can be
very cost effective if you look into it and do it properly . . .

Reminds me a bit of the scam that used to be used here. Buy the boat in
the
name of a corporation incorporated in a state without a sales tax and
federally document the boat. A number of boat owners, including my boat's
PO, got hit with some significant taxes and penalties when the State
caught
onto the scheme and hit him for unpaid use tax.

Donna Lange runs aground

"That reasoning goes a bit too far. I take it you're one of those folks who
figures it's all right to evade income tax by skimming the receipts from
the
cash register, because the bureaucrats would just misuse the money anyway."

YES! Say it loud and proud! YES, YES, YES! F'm. I hate paying taxes,
expecially when I know the money is going down a big huge
empty hole. My money so some Arab who hates me can have electricity? No
thanks. My money so someone who is so stupid that he/she owned a home below
the water level of a levee down the street but didn't see fit to purchase
flood insurance?

I truly wish a movement got started so that every American just didn't even
file his/her income tax. Then what would the likes of Ted Kennedy do?

As to the bad behavior example; ever hear of the Boston Tea Party? Kinda
bad behavior, wouldn't ya say.

As to the sales tax example. You answered my argument for me. Where does
the boat sales tax money go? Who knows? The government takes it and puts
it in a "general fund". What percentage of that "general fund" goes for
boating related issues? Almost nothing. The money is spent on wasteful
nonsense.

What I don't understand is how American keeps going. We are broke, on
paper. If it weren't for China buying all our debt we would be standing in
donut lines.

You may think that this Republic is the greatest. Not me. As far as I am
concerned the American I grew up in has disappeared. We are a corrupt joke
of a country on the precipice of falling into the "Was a great power"
category.

Go ahead , just keeping throwing money to the local, state, federal
government. Give them more, more, more, more, more, more, more. ......
they need it for the next Katrina.

Or to build a tennis club in Iraq.

Not me..

"Dave" wrote in message
...
On Wed, 31 Jan 2007 18:12:07 GMT, "NE Sailboat"
said:

Dave ,, why do you refer to smart business practices as a "scam"?

There is nothing wrong with trying to avoid taxes. In fact, when it comes
to boats .. I think it is crazy not to avoid taxes.

I fully agree with a well-known quote from, Judge Learned Hand:

"[A] transaction, otherwise within an exception of the tax law, does not
lose its immunity, because it is actuated by a desire to
avoid,.....taxation. Any one may so arrange his affairs that his taxes
shall
be as low as possible; he is not bound to choose that pattern which will
best pay the Treasury; there is not even a patriotic duty to increase
one's
taxes."

Problem is that people tend to ignore the first part of the sentence--the
part about "otherwise within the exception of the tax law." I referred to
the incorporating/documenting as a scam because it wasn't tax avoidance.
It
was tax evasion. The tax was legally due, and people tried to pull the
wool
over the tax authorities' eyes by not leaving a paper trail that the
authorities could easily find.

What does the state do with all the sales taxes it collects from the poor
boaters?

I dunno. Does it keep collections from the poor boaters in a separate
kitty
from collections from the rich ones? Must be a pretty small kitty.

Does it use this money to improve the harbors? Or add docking
areas? Nope, it takes this money and ****es it down the drain. Some fat
ass crook will get the money.

Screw that.

That reasoning goes a bit too far. I take it you're one of those folks who
figures it's all right to evade income tax by skimming the receipts from
the
cash register, because the bureaucrats would just misuse the money anyway.

If the government is so concerned with collecting taxes, why does it let
corporations such as Canival Cruise Line operate here almost exclusively
yet
have all their boats registered offshore?

An argument sometimes called trying to justify bad behavior by pointing at
other bad behavior.