The Hull Truth - Boating and Fishing Forum

Go Back   The Hull Truth - Boating and Fishing Forum > BOATING FORUMS > The Boating Forum
Search

Notices

Random Quote: What we have here is a failure to communicate...
Reply
 
Thread Tools Search this Thread
Old 01-23-2008, 07:16 AM
  #1    
Senior MemberCaptains Club Member
 
Join Date: Apr 2002
Location: offshore, FL
Posts: 565
Default Setup an LLC for boat ownership?

Does anyone have a good site or good content on the benefits of owning your boat through an LLC?

I have heard different things like you can expense all the boat related expenses (payment, insurance,gas, tackle) effectively making it all a pre-tax? or that you have to close down the LLC if you don't make a profit in three years etc.

Would love to hear from someone who has actually set up an LLC for this purpose on the benefits/headaches

stingerhook is offline   Reply With Quote
Old 01-23-2008, 08:41 AM
  #2    
Senior MemberCaptains Club Member
 
Join Date: Dec 2007
Posts: 14,491
Default Re: Setup an LLC for boat ownership?

Is your purpose to have a partnership own the boat, or something related to expensing as much as possible?
__________________
Rick
Alabama Gulf Coast
Chaparral 240 Signature (Sold)
motorhome (newest cruiser)
bamaboy473 is offline   Reply With Quote
 
Old 01-23-2008, 10:11 AM
  #3    
Senior MemberCaptains Club Member
 
Join Date: Apr 2002
Location: offshore, FL
Posts: 565
Default Re: Setup an LLC for boat ownership?

no partnership - the reasons would be to 1) pay pre-tax for as much of the operating expenses as possible and as a distant second 2) avoid liability that might result from any accident
stingerhook is offline   Reply With Quote
Old 01-23-2008, 10:39 AM
  #4    
Admirals Club
 
Join Date: May 2006
Location: Suffolk, Va.
Posts: 10,623
Default Re: Setup an LLC for boat ownership?

Some Ins Co. will not insure boats under a personla line police which are in an LLC.
fishingfun is offline   Reply With Quote
Old 01-23-2008, 10:56 AM
  #5    
Senior Member
 
Join Date: Jan 2006
Location: CT
Posts: 749
Default Re: Setup an LLC for boat ownership?

What do you mean by "pay pre-tax for as much of the operating expenses as possible " ? I'm not following this logic.
Joenic is offline   Reply With Quote
Old 01-23-2008, 11:17 AM
  #6    
Admirals Club
 
Join Date: Nov 2005
Location: The Low Country of the Carolinas
Posts: 938
Default Re: Setup an LLC for boat ownership?

To try and write the whole thing off, even though its a personal boat, legally
__________________


2011 Yellowfin 36
fishman 77 is offline   Reply With Quote
Old 01-23-2008, 11:26 AM
  #7    
Senior MemberCaptains Club Member
 
Join Date: Aug 2007
Location: Lafayette, LA
Posts: 1,140
Default Re: Setup an LLC for boat ownership?

We used this one for our new boat:

http://www.delreg.com/yacht.cfm
__________________
07 Regulator 23FS
Southern Hunter is offline   Reply With Quote
Old 01-23-2008, 11:27 AM
  #8    
Senior MemberCaptains Club Member
 
Join Date: Dec 2003
Location: Ft. Lauderdale, FL
Posts: 1,637
Default Re: Setup an LLC for boat ownership?

I am a cpa and have done this for a few people that operate charters. Basically, there needs to be a business purpose for you to have an LLC and deduct the expenses. Then the question gets raised is this a business or is it a hobby (this where your comment about 3 yrs w/o a profit comes into play). The correct answer is you can only have an LLC (or any corp) for business purposes. Then all business expenses can be deducted. the reality is how long and how much can you do before you get caught if the boat is for personal use? and that is personal risk that you need to assess. there a bunch of rules and criteria that the IRS looks into to determine if it is a business use or personal use. I wont get into all that here though. If you have more detailed questions, send me an IM.
__________________
REMEMBER SOME PEOPLE ARE ALIVE SIMPLY BECAUSE IT IS ILLEGAL TO SHOOT THEM.
gtrfred is offline   Reply With Quote
Old 01-23-2008, 11:37 AM
  #9    
Senior MemberCaptains Club Member
 
Join Date: Dec 2007
Posts: 14,491
Default Re: Setup an LLC for boat ownership?

Paying expenses for a personal item is always personal, not tax-free. Getting into an LLC involves several ownership entities, different tax forms, different insurance policies, different record-keeping, different checkbook, documented hours for personal use and "business" use.
If you figure out how to do this without all the headaches, let me (and a couple thousand other THT boat owners) know!
__________________
Rick
Alabama Gulf Coast
Chaparral 240 Signature (Sold)
motorhome (newest cruiser)
bamaboy473 is offline   Reply With Quote
Old 01-23-2008, 11:41 AM
  #10    
Banned
 
Join Date: Apr 2007
Posts: 621
Default Re: Setup an LLC for boat ownership?

If you are not running a charter or using the boat for some kind of business purposes, this is clearly illegal. In fact, the law specifically says that business entities used solely for the purpose of avoiding taxes are illegal.

Second, an LLC is not even an entity as far as the IRS is concerned. You'll still be filing a schedule C or corporate taxes, if you incorporate.

You're treading on thin ice, dude.
CopyKat is offline   Reply With Quote
Old 01-23-2008, 11:43 AM
  #11    
Senior Member
 
Join Date: Jan 2006
Location: CT
Posts: 749
Default Re: Setup an LLC for boat ownership?

Quote:
fishman 77 - 1/23/2008 10:17 AM

To try and write the whole thing off, even though its a personal boat, legally
That's what I thought he was getting at. There is no way of doing that "legally", as stated before, there must be a business purpose, either in whole or in part. If you can figure out a way to get around this, please let me know, as I'm a CPA also, and I would love to be able to help myself amd many clients.
Joenic is offline   Reply With Quote
Old 01-23-2008, 11:53 AM
  #12    
Senior Member
 
Join Date: Aug 2005
Location: Ortley Beach, NJ
Posts: 591
Default Re: Setup an LLC for boat ownership?

Ditto on what the other accountants said. Why waste your time on setting up an illegal entity. Just rob a bank and all the money you stole can be considered pre-tax and you don't even have to worry about keeping a log for the expenses you intend to "write-off" for your robbery expense. Same difference with alot less paper work involved. Capisco!
Art Vrola is offline   Reply With Quote
Old 01-23-2008, 12:09 PM
  #13    
Senior MemberCaptains Club Member
 
Join Date: Mar 2003
Location: Bermuda
Posts: 4,568
Default Re: Setup an LLC for boat ownership?

Search Montana & LLCs. Also states like DE, SD & TX. People have them for various reasons. US citizens have them for tax benefits. Non US citizens have them in order to have a vehicle, boat, RV etc. in the US to use recreationally. The non US citizen does not derive an income within the US, may not have a US address, does not have a SSN, all of which are needed to personally own a vehicle. The LLC enables the indirect ownership & use of the vehicle.

It is not uncommon for US citizens who no longer have a permanent home i.e. they full time in an RV, to have an LLC & be registered in the LLC state as home state even though they may never go there.

Research carefully.
__________________
Doug in Bermuda is offline   Reply With Quote
Old 01-23-2008, 12:48 PM
  #14    
Senior MemberCaptains Club Member
 
Join Date: Apr 2002
Location: offshore, FL
Posts: 565
Default Re: Setup an LLC for boat ownership?

Thanks for the responses! I will research all

and let me rephrase the question...

if I were to setup an LLC and own the boat through the LLC, what are some of the things I would have to do for it to be recognized as a business - and therefore have all the expenses be pre-tax? and what are the risks of audit and related penalties if the IRS judges this to be an inappropriate tax vehicle.

For example, the IRS is not going to be able to determine my intent (Avoid taxes or run a charter business) so what motions do I have to go through? Give/get receipts? have the buddies pay for gas with a check? advertise somewhere? setup a checking account for the LLC and use it to buy gas and bait?

As for all the morallizing about robbing a bank - i don't think its comparable, more of a gray area. Things like a 1031 exchange, holding assets in a trust, even writing off a lunch or a round of golf with friends as a buisness expense, having a home office deduction etc.
stingerhook is offline   Reply With Quote
Old 01-23-2008, 01:33 PM
  #15    
Senior MemberCaptains Club Member
 
bsmit24's Avatar
 
Join Date: Aug 2004
Location: Republic of West Florida
Posts: 15,307
Default Re: Setup an LLC for boat ownership?

I briefly thought about starting a not for profit charity as a office place joke and asking coworkers to donate. My line of thinking was to set up the charity to take children, inner city kids, etc fishing. This way any money I or others donated would be able to be taken off of my taxes. I still like the idea but need to research it better. Hell if jesse jackson can do it why can't I?
__________________
.
"There is no crueler tyranny than that which is perpetuated
under the shield of law and in the name of justice."
~ Charles De Montesquieu

.
bsmit24 is offline   Reply With Quote
Old 01-23-2008, 02:06 PM
  #16    
Senior MemberCaptains Club Member
 
Join Date: Sep 2003
Location: New Port Richey, Florida
Posts: 2,480
Default Re: Setup an LLC for boat ownership?

Quote:
stingerhook - 1/23/2008 9:11 AM

no partnership - the reasons would be to 1) pay pre-tax for as much of the operating expenses as possible and as a distant second 2) avoid liability that might result from any accident
Sounds like you're just trying to write off your own hobby...
Why do you want to risk it- just pay the extra 20-40% like the rest of us
__________________
Sea Ray 390 EC, 3208 CATS
tobnpr is offline   Reply With Quote
Old 01-23-2008, 02:55 PM
  #17    
Senior MemberCaptains Club Member
 
Join Date: Feb 2001
Location: Manassas Va USA
Posts: 3,958
Default RE: Setup an LLC for boat ownership?

One other thing you may have to get your captians license and comm. insurance.. to claim operation of the boat under a LLC.
Hawkeye is online now   Reply With Quote
Old 01-23-2008, 03:10 PM
  #18    
Senior MemberCaptains Club Member
 
Join Date: Jan 2003
Location: Essex Fells NJ USA
Posts: 118
Default Re: Setup an LLC for boat ownership?

I still don't get your "pre-tax" theory? The LLC would have to have an income in order to write off expenses pre tax. If you are funding this LLC with your own money than you have already paid tax on it so whats the point?
S Adams is offline   Reply With Quote
Old 01-23-2008, 03:18 PM
  #19    
Senior MemberCaptains Club Member
 
Join Date: Apr 2002
Location: offshore, FL
Posts: 565
Default RE: Setup an LLC for boat ownership?

just from some quick research - in my case it appears to be not worth the trouble.

I would likely need a business account, checks and receipts, captains license and changes to insurance/registration, additional tax prep and administrative time and expenses......

If I ran - say a kingfish tournament boat though- i would think it would make a whole lot of sense to set up an LLC though. Considerable expenses, chance at an actual profit etc.
stingerhook is offline   Reply With Quote
Old 01-23-2008, 03:21 PM
  #20    
Senior MemberCaptains Club Member
 
Join Date: Apr 2002
Location: offshore, FL
Posts: 565
Default Re: Setup an LLC for boat ownership?

Quote:
S Adams - 1/23/2008 2:10 PM

I still don't get your "pre-tax" theory? The LLC would have to have an income in order to write off expenses pre tax. If you are funding this LLC with your own money than you have already paid tax on it so whats the point?
Use the expenses to create a paper 'loss' of say 10k to offset your income from other sources and thereby reduce my total taxable income in any given year

pretax is probably inaccurate description....generate a loss from a business venture using ...expenses I would have incurred anyway?

BTW this is totally hypothetical for all the IRS agents on the site :-)
stingerhook is offline   Reply With Quote
 
 
Reply

Thread Tools Search this Thread
Search this Thread:

Advanced Search

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off

Similar Threads
Thread Thread Starter Forum Replies Last Post
A New boat and the hidden costs of ownership.. DoorKicker The Boating Forum 29 02-10-2008 06:30 AM
First boat ownership; bottom painting joshs The Boating Forum 5 05-23-2007 01:14 PM
Boat Advice needed - newbie to boat ownership cornwallis The Boating Forum 4 04-21-2007 08:27 PM
First time boat ownership joshs The Boating Forum 5 04-13-2007 09:00 AM
The joy of boat ownership... haifisch The Boating Forum 0 03-12-2005 03:05 PM

 



©2009 TheHullTruth.com

Powered by vBulletin® Version 3.7.6
Copyright ©2000 - 2014, Jelsoft Enterprises Ltd.
Search Engine Friendly URLs by vBSEO 3.2.0