Business write offs???

Hey guys,

I have a question for you tax guys that pertains to writing off a portion of a new boat…

I am stongly considering purchasing a new boat within the next few months, but I am wondering if I could write any of it off as a business expense. I currently own/operate an insurance company, and also plan on adding a specific type of boat insurance to my line of products within the next months.

My question is, since this boat will be a marketable object with business signage on it, and the fact that I plan on taking out clients with it, could I get by writing off a portion of the payments???

Thanks for your help!

Will you be taking it on the federal waters with passengers? if yes you must a licensed capt to do so. If you are then yes you can write of a portion of the boat , gas, insurance, and so on

Depends on how much you want to toe the line. If the men in black (IRS) wanted to question you, you woudl have a hard time arguing that the boat helps make your business run. Write off the signage on the boat but not the actual boat. In general, I use the “does the asset build your revenue stream” rule. If your a fishing guide yes it does, but for a insurance guy no it doesn’t, for the most part…

Any other questions feel free to drop me a line. [email protected]

As I put alot of business miles on my pick-up (60,000/yr).
I write off a tank full of boat gas or a couple trailer tires every now and then. I also take clients fishing and consider that as advertising and promotion. Maybe not kosher,but innocent until proven guilty.
WKW

I don’t know if you have any employee’s, but if you make the boat available to them also I can see an argument to be able to write the whole boat off. JMO

FDR

Chowdski,

To be a business deduction the expense must be ordinary and necessary in the normal course of your business (Code Section 162). It is big stretch for a insurance agent to deduct a portion of boat. Consider this instead, when you do take clients out on the boat, have your insurance agency rent the boat from you. The boat rental would be entertainment expense to the business. Under Code section 280, you do not have to claim the boat rent as income to you personally as long as you rent the boat 10 days or less each year. It is a great rule, so use it!!!

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Will you be taking it on the federal waters with passengers? if yes you must a licensed capt to do so. If you are then yes you can write of a portion of the boat , gas, insurance, and so on

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I think that is only if he is taking them out and charging them for guide services, if he is just taking them out fishing and not getting paid for it then I do not think he needs to be licensed.

Thanks for all of your replies guys!

I think I need to be a little more clear on what exactly I will be using the boat for…

I will be taking clients out once in a while, but the boat will mostly be used for tournament fishing. Since I will soon be offering a line of tournament boat insurance, I wanted use the boat as an advertising piece in hopes of increasing my business exposure and to “spread the word” about this specific coverage that I am now able to offer.

Would this be something that would fall under a reasonable business expense??? In my opinion, It is simply no different than any other form of advertising. I am simply putting my product in front of a certain target market.

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Thanks for all of your replies guys!

I will be taking clients out once in a while, but the boat will mostly be used for tournament fishing.fer.

Would this be something that would fall under a reasonable business expense??? In my opinion, It is simply no different than any other form of advertising. I am simply putting my product in front of a certain target market.

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Anyone know how sponsorships work as far as taxes go. If his insurance business sponsor him enough to pay for the boat, what would the tax implications be?
I am thinking like this because what if you happen to win a tourney and the Insurance company owns the boat? Who would the check get written out to for all practical purposes?

Sorry…just rambling.

FDR

You really have seperate tax issues. First, you do have a advertising expense for the cost to put the logo on the boat. This is an ordinary business expenses.
The second issue is the cost of the boat, up keep, operating expenses, etc. If you are using the boat for personal use, and it happens to have your company logo/info on it for advertising purposes; the boat is still personal and not a business deduction. I do business taxes for a living and have 22 years of experience. I currently work with about 250 small companies. The fact that you sell boat insurance and take clients out, still may not pass the ordinary and neceessary standard. Particularly, the necessary part.
Now, if you are using the boat for tournament use this may change things. Unless you are a full time tournment pro, your tournament fishing is considered a “hobby”. Under the Internal Revenue Code you can offset hobby income (prize money) with hobby expenses. So, if you win money you can deduct costs associated with the boat and tournment cost (to the extend of your winnings). If you do not win any money, you can not deduct the boat expenses or any other costs. You have serveral tax issues and my advise is to seek the help of a professional.

Scott Kaiser, EA
Kaiser Tax & Business Consulting
[email protected]

Thanks for the clarification Scott!

As far as seeking a professional, I’ll give you a call sometime this week about this. My dad is actually a client of yours. (Brian Schneider)