Ah the good life.
Yacht charter business tax. Wrong if you put the vessel into a Corporation and run it as a business and ensure you meet the relevant standards and tests then it is a small business and is taxed accordingly. The problem with buying a yacht and taking tax benefits derived by placing it in a charter business is that very few charters actually meet the IRS definition of a business. Meanwhile here is an interesting excerpt about a case won by a taxpayer about active boat ownership.
Thinking of buying a luxury yacht and chartering it when you arent using it for your own pleasure. Catamaran Charter Business and Tax Savings. There are many regulatory challenges to a charter program for a yacht which include complex domestic and international law regulations safety and insurance considerations.
A key step is to decide on a suitable location for the establishment of a corporate structure to own the yacht and act as the charter business. A yacht does not qualify for tax advantages. 4 For example if you use your boat or airplane for charter business purposes and you also take it out for personal reasons you must document.
Tax Court sinks IRS passive loss. This will ensure that all allowable business tax deductions advantages and yacht charter income will largely cover the cost of boat ownership. The phrase active yacht ownership refers to the business strategy of purchasing a yacht and placing it into a charter program to generate income Section 183 of the IRS code also known as the hobby loss rule limits the losses that can be deducted from income which are attributable to hobbies and other not-for-profit activities.
This is the prrof that those cases can be won. Regardless what any broker salesman or their cronies may tell you. Recently we have noted an increase in IRS scrutiny and audits of yacht charter operations in which the IRS challenges business expenses and depreciation claimed by taxpayers.
Instead of purchasing yachts and houseboats Home at Sea LLC plans to offer rentals to families and young couples of. The yacht is an equipment that is being purchased and placed into service in a small business that has the ability. In order to qualify as a second home the debt must be secured by your main home.