BOAT OFFICE

[Max W]

On 7/5/2017 at 2:01 PM, Abby Normal said:

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'.

t was purchased to be used exclusively as an office.  As well as a working area, business records were stored there and there is a conference room where he met with clients.   

The boat was appraise for over $300K and purchased for $160K and the appraisal was over $300K.  He thought he got a bargain, but an astute buyer would have smelled a rat, because it later turned out to be not seaworthy.  If you consider that office rents in this area for similar facilities would be over $3500/m, it makes good economic sense.