Tax question concerning boat.?

Question

My husband is self employed and we entertain a lot. We both decided to purchase a boat this year to entertain his clients on it.
Will we be able to take any tax deductions on it this year, say for example gas if it's out all day? It's a 30' cabin cruiser.

Answer 1

No, according to IRS Publication 463, you cannot deduct the operating expenses of the yacht as an entertainment facility.

See Pub 463, page 13

http://www.irs.gov/pub/irs-pdf/p463.pdf

You may be able to take mortgage interest on the boat as a second home, using Form 1040, Schedule A.

Answer 2

No you can not claim the gas expense for the boat, but if you are itemizing your deductions rather than taking the standard deduction you might be able to deduct the State and Local Sales tax that was paid on the boat, You have a choice of deducting State and Local Sales Tax or State and Local Income Tax on line 5 of the Schedule A.
See Publication 600
http://www.irs.gov/pub/irs-pdf/p600.pdf

Answer 3

You will probably be able to write at least a percentage off, if you keep a good log of when it is used and for what purpose. It will almost certainly trigger an audit flag at the IRS, so make sure you run this through a good tax accountant and be prepared to defend the deductions. At worst, the IRS will disallow it and you will owe some extra tax.

Answer 4

You will have a tough, tough time convincing the IRS that the boat is only used for business use. The gas might be deductible. You really need to speak to a tax pro before doing so.

Answer 5

I am sure you can write of a percentage for business. In years past if the boat had a restroom on board you could write it off as a second home. I would definitely check with a qualified tax consultant.