Max W Posted June 27, 2017 Report Posted June 27, 2017 Client purchased a 62 foot boat this year to be used exclusively for his office (Sch C). Office and file storage occupy about 35% of boat. The way I am treating it as follows - 35% deprecialbe; 65 %non-depreciable just like if it were land. Any comments. Thanks. 1 Quote
FDNY Posted June 28, 2017 Report Posted June 28, 2017 No comment other than I like the way you think and I hope you get to spend all day on the boat working on his return with an umbrella in your drink. 4 Quote
Elrod Posted June 28, 2017 Report Posted June 28, 2017 I can see you now Max.....What a fun time tax prep. will be for you... But....It will be hard to concentrate with this on board..... 4 Quote
Catherine Posted June 28, 2017 Report Posted June 28, 2017 OK, boys, remember to take your blood pressure meds... 6 Quote
OldJack Posted June 29, 2017 Report Posted June 29, 2017 Well, I really question the 65% personal. Is it his home? Does he have a home otherwise? Does he have another office? Why is the boat not 100% business? What does the taxpayer/owner say about its purpose and use? 2 Quote
FDNY Posted June 29, 2017 Report Posted June 29, 2017 I see what you mean. This may be considered a second home and it would be OK to claim a home office deduction if he meets the criteria. You say exclusively as an office, what is his occupation? Boat seller? Lobbyist? Drug dealer? Caviar tastings and transporter? So many questions. 3 Quote
Max W Posted June 29, 2017 Author Report Posted June 29, 2017 2 hours ago, OldJack said: Well, I really question the 65% personal. Is it his home? Does he have a home otherwise? Does he have another office? Why is the boat not 100% business? What does the taxpayer/owner say about its purpose and use? Answer - It is not his home; he does have a rented apartment; it is his only office; and IT IS 100% business. My question is - is the entire boat depreciable, or only the area used for business? Quote
Max W Posted June 29, 2017 Author Report Posted June 29, 2017 2 hours ago, FDNY said: I see what you mean. This may be considered a second home and it would be OK to claim a home office deduction if he meets the criteria. You say exclusively as an office, what is his occupation? Boat seller? Lobbyist? Drug dealer? Caviar tastings and transporter? So many questions. FDNY - it is not a 2nd home. It is strictly used regularly and exclusively for business which is putting together financial deals for which he receives a hefty commission. Your point about being a second home is well taken and may be the safest way to go. Quote
FDNY Posted June 29, 2017 Report Posted June 29, 2017 So if he had an office building and used it for 35% business you would depreciate that portion less the appropriate land value. So would you depreciate 35% of the boat less a salvage amount? Quote
Lee B Posted June 29, 2017 Report Posted June 29, 2017 Are you saying that this boat never leaves the dock ? Quote
BLACK BART Posted June 30, 2017 Report Posted June 30, 2017 ??? There's something I like about this post, but....can't put my finger on it. 2 Quote
Abby Normal Posted June 30, 2017 Report Posted June 30, 2017 24 minutes ago, BLACK BART said: ??? There's something I like about this post, but....can't put my finger on it. If you do you might get smacked. 4 Quote
Max W Posted June 30, 2017 Author Report Posted June 30, 2017 On 6/29/2017 at 1:31 PM, FDNY said: So if he had an office building and used it for 35% business you would depreciate that portion less the appropriate land value. So would you depreciate 35% of the boat less a salvage amount? Well, that's what I had in mind. Quote
Max W Posted June 30, 2017 Author Report Posted June 30, 2017 On 6/29/2017 at 1:34 PM, cbslee said: Are you saying that this boat never leaves the dock ? Never! After purchasing the boat, he found out it was not seaworthy. The previous owner had made some modifications that made it top-heavy. He had had the boat appraised prior to purchasing it and bought it at a discounted price thinking he had a deal, but when he found out that it was not seaworthy, if were to sell it now, he would lose $100K. I wonder if there was some collusion between the appraiser and the seller. Hmmm! 1 Quote
Abby Normal Posted June 30, 2017 Report Posted June 30, 2017 4 minutes ago, Max W said: I wonder if there was some collusion between the appraiser and the seller. I would pursue a lawsuit against the appraiser. But this raises an interesting point. When you place an asset into service for depreciation, you have to use the lower of cost or FMV. And then you can only use 35% of that lower number to depreciate. 1 Quote
OldJack Posted July 5, 2017 Report Posted July 5, 2017 It appears that the boat is NOT used for any purpose other than for business, therefore why would it not be a 100% deprecation asset and business deductible? It appears to me the whole boat is his office or business. If you treat it as personal property you will keep the taxpayer from recognizing a deductible loss if sold. 1 Quote
JimTaxes Posted July 5, 2017 Report Posted July 5, 2017 just wondering how this comes into play: What Can I Deduct? To be deductible, a business expense must be both ordinary and necessary. An ordinary expense is one that is common and accepted in your trade or business. A necessary expense is one that is helpful and appropriate for your trade or business. An expense does not have to be indispensable to be considered necessary. 2 Quote
Abby Normal Posted July 5, 2017 Report Posted July 5, 2017 3 hours ago, OldJack said: It appears that the boat is NOT used for any purpose other than for business, therefore why would it not be a 100% deprecation asset and business deductible? It appears to me the whole boat is his office or business. If you treat it as personal property you will keep the taxpayer from recognizing a deductible loss if sold. But the unused part is not used for business, so it is personal use, even if it's not used for wild parties. Quote
OldJack Posted July 5, 2017 Report Posted July 5, 2017 31 minutes ago, Abby Normal said: But the unused part is not used for business, so it is personal use, even if it's not used for wild parties. Sure it is! Using your theory a stand alone insurance business building could only deduct where their desk were located in the building. Please tell what personal use when the "taxpayer" said the boat was purchased for business use, or did he say only his desk was for business? Maybe you are only thinking office in the home deduction? Its not a home. 1 Quote
Abby Normal Posted July 5, 2017 Report Posted July 5, 2017 It was originally purchased for pleasure, but it wasn't seaworthy, so the owner decided to use part of it for his office. If I bought a 100,000 square foot office building but only used 800 square feet for my office, the IRS would say (and I would agree) that I could not depreciate the whole building because it doesn't meet the 'necessary' test of 'ordinary and necessary'. Quote
OldJack Posted July 5, 2017 Report Posted July 5, 2017 On 6/27/2017 at 6:10 PM, Max W said: Client purchased a 62 foot boat this year to be used exclusively for his office (Sch C). @Abby Normal: Read the original post. Is it your opinion that the taxpayer did not intend otherwise? Quote
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