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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.
More importantly, I suspect the write offs are taken against an actual profit-making business. The other sure sign of a sham is when the write offs zero out (or exceed) the business's revenues.
 

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Discussion Starter #22
I am over this thread and it was clearly a bad idea... but I have one more question just out of curiosity...

If you form a company, put the boat into an company as a charter.... can you be the only one that charters it?
 

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And given the size and scope of his company... he can afford quite a bit of writing off...
 

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No... not without the IRS flagging you a dozen different ways.
I am over this thread and it was clearly a bad idea... but I have one more question just out of curiosity...

If you form a company, put the boat into an company as a charter.... can you be the only one that charters it?
 

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But few corporations are formed for the sole purpose of writing off a boat. See the difference?

Besides, if you;'re gonna form a corp to shelter the boat, why not go a step farther and register your cars through the corp, and then use them as "company cars," and write off the mileage. Buy a dog, and write off the purchase and food and vet bills as "security system installation and maintenance.' Instead of giving your kids an allowance for feeding the dog, hire them as security staff. When your kids go off to college in East Podunk, apply to the SBA for a business expansion, because the funding is required to open a branch in East Podunk. Buy a house with the expansion funds, rent junior a room, rent rooms to five of his buddies, , now write off the hiring of a new sales force as well....
If Bernie Madoff could keep churning his clients for three decades without getting caught, somebody might be able to pull this off.
 

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as for my situ, i spoke to a lawyer about it first. the llc owns the boat, the llc was formed for the purpose of owning the boat, I am the sole owner of the llc. the llc paper work states the llc is not in the business of making money.

as far as delaware and maryland are concerned it is legal and is not a sham. not sure about other states. as I still have to pay taxes on any money the llc would/could/did not make. IIRC from the lawyer said its legal as long as no taxes are owed, and maryland does not have property taxes on boats and the boat is registered in maryland.

now the boat did have sales taxes paid when purchased, so there is no tax avoidance issues in any state. the fed tax id number is also legit, when tax time comes around money made by LLC is nothing, money spent by LLC is nothing. the one and only tax return by the llc ( so far ) , which is attached to my tax return did not get any extra attention from the feds. sole proprietors have the taxes attached to the sole owner.

now i would never do anything to try to avoid taxes, as i dont like fed attention. this is the same thing guys who own class 3 fire arm stuff do, only issue is if i sell the boat i will need to pay taxes on the sale and i cant hide em.

edit just looked at the llc paper work, it does state for reason of the the LLC " for ownership of sailing vessel and possible chartering of said sailing vessel " well sense i dont have a 6 pack yet i cant charter it yet, so no income. ins had no issue either, as i cant charter it and i am the sole owner. infact the ins was slightly cheaper because i was able to get it thru the same ins agent that ins my llc that has my electric license
 

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It looks like Zboss' question was about incorporating his business and then having the boat in the business' name and entertaining clients with the boat. As long as the boat is used for business purposes 50% of the time, this is allowed. The corporation would not be created for the sole purpose of owning a boat, that was someone else's strategy for limiting liability - putting a boat in an LLC.
 

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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.
not in maryland, we get crooks who win lawsuits all the time here for when they get hurt breaking the law. one of the funniest i saw in the paper was a shoplifter who was running out of a store broke his nose on the door when it did not open fast enough. court gave him 5 grand, the store sued him for property damage ( broke the door ) and they won 5 grand, so it was a wash
 

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Maryland has some truly idiotic laws.
not in maryland, we get crooks who win lawsuits all the time here for when they get hurt breaking the law. one of the funniest i saw in the paper was a shoplifter who was running out of a store broke his nose on the door when it did not open fast enough. court gave him 5 grand, the store sued him for property damage ( broke the door ) and they won 5 grand, so it was a wash
 

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I am not familiar with all the various corporate laws/structures.

I do not believe that an LLC will shield your personal assets in a lawsuit.

I do not believe that you can charter...to yourself....

If your goal is to be able to write down some of the boat expenses, and since you seem willing to take people out on it. You might get a 6 pack license, start a charter company, and take passengers for hire. That may allow you to write down the expenses, and any memberships, educational classes etc.

You may need a CG license, anyway, if you were taking your wife's clients out since there is an implicit business use.

IF you do nothing with regard to business use... and the vessel has a head, a galley and a berth, you can write off an interest from a boat loan as a " second home"
 

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I am not familiar with all the various corporate laws/structures.

I do not believe that an LLC will shield your personal assets in a lawsuit.

I do not believe that you can charter...to yourself....

If your goal is to be able to write down some of the boat expenses, and since you seem willing to take people out on it. You might get a 6 pack license, start a charter company, and take passengers for hire. That may allow you to write down the expenses, and any memberships, educational classes etc.

You may need a CG license, anyway, if you were taking your wife's clients out since there is an implicit business use.

IF you do nothing with regard to business use... and the vessel has a head, a galley and a berth, you can write off an interest from a boat loan as a " second home"
IIRC, to write the interest off as a second home, the following conditions must be met: The boat must have a permanently installed head and galley stove. The loan must be secured with the boat as the collateral.
 

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Sailing Dog,

I'm not sure what you're clarifying?....here is the quote from the Irs page.



Qualified Home
For you to take a home mortgage interest deduction, your debt must be secured by a qualified home. This means your main home or your second home. A home includes a house, condominium, cooperative, mobile home, house trailer, boat, or similar property that has sleeping, cooking, and toilet facilities.
 

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Yes, but a porta-potty and camping stove don't qualify, as they are not permanently installed and if they're not on the boat, the boat's loan interest can't be written off... The IRS isn't stupid... and isn't going to allow someone to buy a big expensive daysailor with a cuddy and have them claim it as a second home by putting a porta-potty and camping stove on it. :rolleyes: :rolleyes:

Sailing Dog,

I'm not sure what you're clarifying?....here is the quote from the Irs page.



Qualified Home
For you to take a home mortgage interest deduction, your debt must be secured by a qualified home. This means your main home or your second home. A home includes a house, condominium, cooperative, mobile home, house trailer, boat, or similar property that has sleeping, cooking, and toilet facilities.
 

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"now i would never do anything to try to avoid taxes,"
Scotty, i think you've been grossly misinformed. Tax avoidance, as every IRS agent and every tax court will tell you, is entirely legal.
Tax evasion is criminal.

Big big difference between the two. Tax avoidance consists of very carefully following the rules and toeing the lines. Tax evasion happens when you cross the lines and break the rules.

If you have a lawyer who is willing to stake his malpractice rates on advice he's given you about tax shelters and your boat...great! The devil always lies in the details and the rest is between you and him.
 
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