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  #11  
Old 03-08-2010
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my boat is titled in an llc based in delaware, i did that for simple reasons. like some idiot comes on my boat when i am not there and falls overboard and drowns and his wife can not sue me, the only thing the llc owns is the boat.

dont think about doing what you are, if some idiot comes on your boat and drowns his wife can go after all of the companies income.
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  #12  
Old 03-08-2010
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"my boat is titled in an llc based in delaware,...the only thing the llc owns is the boat."

If the corporation has no business other than owning the boat? And doesn't, say, engage in the charter trade or make some business use of the boat?

That's often held to be a "sham corporation" and it won't stop anyone from coming directly after you, it will just add to the legal fees along the way. Not to mention, anytime a tax man sees "Delaware corporation" they're gonna start tearing the paperwork apart looking to see what is being dodged. They got wise to that back in the 80's.
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Old 03-08-2010
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HelloSailor's point about the likelihood that your corporation would be found to be fraudulent and designed strictly to shelter assets is very good. I'd also point out that there really is no need for such a corporation, since someone who comes aboard your boat without you there and without your permission is trespassing. Unless you have done something to intentionally harm the trespasser, there is little chance that you will be found liable for any injuries they sustain. Trespassers, by custom and in many states by law, are responsible for their own actions and any injuries they sustain in the process of trespassing.

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Originally Posted by scottyt View Post
my boat is titled in an llc based in delaware, i did that for simple reasons. like some idiot comes on my boat when i am not there and falls overboard and drowns and his wife can not sue me, the only thing the llc owns is the boat.

dont think about doing what you are, if some idiot comes on your boat and drowns his wife can go after all of the companies income.
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  #14  
Old 03-09-2010
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Originally Posted by scottyt View Post
my boat is titled in an llc based in delaware, i did that for simple reasons. like some idiot comes on my boat when i am not there and falls overboard and drowns and his wife can not sue me, the only thing the llc owns is the boat...
Aside from the obvious sham corporation that others have pointed out, isn't this what insurance is designed to cover? Don't all marinas require this insurance?
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Old 03-09-2010
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You could have an llc own the boat, then rent the boat back to your business. Then the llc is in the boat rental business and is no longer a sham. Your business then needs to use the boat for business purposes, like client entertainment more than 50% of the time. If you could PROVE that your boat was used for the entertainment of PROVABLE clients and potential clients, and the amount that you're spending on client entertainment isn't way outside of industry norms, then you could get away with it.

I would rather spend my time figuring out how to make enough money to just have the boat I want, instead of figuring out ways to get myself audited.
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"isn't this what insurance is designed to cover? Don't all marinas require this insurance?"
No, they usually require liability insurance up to a fairly low amount, 1/4 million perhaps. But if someone gets drunk, falls overboard and drowns, the wereguild for one death can easily run $3.2 million dollars (typical FAA accounting) so you'd need liability coverage in excess of 3 mil assuming you had any other assets--or anticipated income during the next 20 years.

John, renting and leasing back and forth is exactly what gets corporations declared shams. Everything about all aspects of the business has to be "arms' length" and handled on the open market at market prices and market terms. Setting yourself up on a sweetheart deal with no competition, no bids, no other parties involved--won't impress the tax men.

Start a church on the boat, be the liveaboard pastor, make sure everyone is invited to come congregate and pray multiple times a week and then "experience the glory of the gods" at sea. THAT you can do legally, but you'll still have to give away the value of the boat (to the church) and your corporate bylaws will have to ensure it still gets given away to another non-profit group, never to come back to your pocket. Not so perfect, huh?
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Old 03-09-2010
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Quote:
Originally Posted by hellosailor View Post
"isn't this what insurance is designed to cover? Don't all marinas require this insurance?"
No, they usually require liability insurance up to a fairly low amount, 1/4 million perhaps. But if someone gets drunk, falls overboard and drowns, the wereguild for one death can easily run $3.2 million dollars (typical FAA accounting) so you'd need liability coverage in excess of 3 mil assuming you had any other assets--or anticipated income during the next 20 years...
I would suggest that a sailboat is not the only liability a person has. You're much more likely to kill someone (or several at one time) driving your car than you are to kill them with your boat while it is docked. If someone is genuinely worried about getting sued for $3.2 million, it is relatively inexpensive to buy an umbrella policy that could cover ALL of a person's liabilities, not just a boat.
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Originally Posted by hellosailor View Post
John, renting and leasing back and forth is exactly what gets corporations declared shams. Everything about all aspects of the business has to be "arms' length" and handled on the open market at market prices and market terms. Setting yourself up on a sweetheart deal with no competition, no bids, no other parties involved--won't impress the tax men.
It will get your corporation declared a sham if the asset is not used for legitimate business purposes by the business, and the business must lease the property for going market rates. This is exactly what I do with my commercial building. My llc owns the building, and leases it to my auto shop. There are many good reasons to do this, but none of them really apply to the OP. The OP wants to own a sailboat for his own personal enjoyment, and write it off as a business expense.

If the OP forms an llc and haves the llc buy a sailboat, he can then lease the sailboat to his other business for a reasonable rate (costs plus margin). His other business must then use the sailboat for legitimate business purposes. If the boat is used most weekends (and even during the week) to entertain LEGITIMATE clients with the reasonable expectation that such entertainment will secure increased sales, then it is a legitimate business expense. It's really no different than a business buying a membership to a country club to take their clients golfing.

This discussion is of course, moot. We all know that the OP is not looking to purchase a sailboat for legitimate business purposes, he just wants to avoid taxes.
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Old 03-09-2010
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I sometimes wonder what kind of write-offs Larry is claiming with his Oracle boat?
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Old 03-09-2010
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I sometimes wonder what kind of write-offs Larry is claiming with his Oracle boat?
It's advertising. Larry owns the boat, then sells ad space and sponsorship rights to Oracle and BMW. No different than NASCAR or Indy. Big fat write offs that the IRS deems legit.
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