Tax advisor for
business use of yachts (page 1)
Out-of-pocket expenses for business entertaining are deductible subject to the fifty-percent limit provided the regular travel & entertainment rules are satisfied.
However, facility expenses are generally not deductible if your yacht is used to any extent for business entertaining. It may be quite possible to conduct activities aboard your yacht in a manner that qualifies for the exceptions to this general rule. This will enable you to deduct 100% of out-of-pocket expenses in addition to the prorated portion of facility expenses.
The specific exceptions or business uses of a yacht, described in the Tax Code and Regulations are:
- Employee recreation:
- Prizes and awards:
- Rental and chartering: and
- Fringe benefit use
(similar to company cars and airplanes).
Also, some authority exists for deducting facility expenses if your yacht is used as a business meeting facility.
As your Advisor for Business Use, our objective is to review your circumstances and suggest opportunities that enable your company to accomplish it's objectives while satisfying the conditions for the business use exceptions, and legitimately deduct the related facility expenses. Although in some cases it may in your best interest to concede the "entertainment facility" issue and forego facility expense deductions. Certain business and tax advantages can still be accomplished and we will advise you accordingly if this is the case.
Circumstances that might impact tax planning include:
- Nature of the business' revenue producing activities:
- Form of legal organization (C or S corporation,
- Type of yacht and area of principal use:
- Ownership, interest expense, and bareboat
charter values: and
- Number and types of business use activities.
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