On Mon, 12 Jan 2004 18:16:00 GMT, Jenny MacLeod
wrote:

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

There are several ways to get tax deductions connected with boat ownership.
Some are better (safer) than others.

If you have a loan on the boat and it has a toilet and a stove, you may be able
to declare it a "second home" and deduct the interest on the loan along with any
property taxes paid.

If you have a business where you entertain clients (a real estate agent, as John
H suggests, below), you *may* be able to claim the boat as a business
expense--at least partially. This is risky, since it may have the appearance to
the IRS of a taxpayer's trying to evade taxes by calling a "hobby" a "business
expense." It's also risky because you may be more exposed to being audited--and
an audit may uncover other questionable aspects of your tax return(s).

Finally (and this is one of my personal favorites), you can use the boat as a
charter vessel. I've owned an Olson 25 sailboat for about ten years. It is
part of a charter business in the San Francisco Bay. The company (OCSC) handles
all the chartering of the boat along with all maintenance. We split the gross
charter revenue. In return, I am able to depreciate the boat (a non-cash
expenditure) and deduct all repairs and maintenance on the boat, along with
certain items I would buy anyway. The only real downside is that the boat gets
quite a lot of use, so systems do tend to wear out faster than if I were the
only person using the boat.

For my purposes, though, it's been a great setup.

[DISCLAIMER: I am not a CPA or tax lawyer. You should consult with a licensed
professional before making any decisions that may carry tax consequences]

HTH,
Joe Parsons