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View Full Version : what you can and cannot write off on taxes



axkiker
10-11-2006, 04:51 AM
Hey I have a question for all you self employed ballers out there. How many of you write off your boat on your taxes. To make a long story short a friend of mine owns a company. He has his Co. logo up and down the sides of his boat. He says he can write off the payment because its advertisement. Im thinking about going into business myself and this sound like a great idea if its legit. However I dont see it being legit.
Also since we are talking about all this. I am currently a sales rep for a company and use my personal vehicle all day long for work. Can I write off the payment on my taxes because im required to have it for work. I get paid so much for every mile i drive however if I can write off the payment that would rock. Anyways just a thought.
thanks

LakeTrash
10-11-2006, 05:20 AM
Talk to your CPA but I can tell you that your buddy is flirting with disaster. The IRS is not quite as stupid as he thinks and one of the red flags that REALLY gets them going is writing off any part of a boat as a "business expense".
You would have to declare the milage money as income before you can claim the payment as an expense.
LT

BrendellaJet
10-11-2006, 06:16 AM
Do some research on Section 162 of the code. The terms "reasonable & necessary" come to mind....If your buddy has a biz in the marine industry he could be okay, otherwise he is playing with fire. Materiality is an issue too. If his company does say a hundred million a year in revenue and isn't losing money I bet he will be fine. If he is doing 100k a year in revenue and is losing money then he is gonna get bit sooner or later.

H20 Toie
10-11-2006, 06:53 AM
My company pays for the boat and it does not have the company name on it. i just use it to take out clients not for advertisment. and the same goes for the truck. it is a company truck and is well within the guidelines. I checked and doble checked before ever buying it.

Cheap Thrills
10-11-2006, 07:09 AM
The terms "reasonable & necessary" come to mind.....
As well as the term, "Tools of Trade" as long as the vehicle is used as such.
I think that the car would be easier to write off than the boat unless the boat is used primarily for promoting a boating related business as in Entertaining Clients and or Advertisement.
As with any law, it's open to interpretation. Roll the dice and let your conscious be you guide.
C.T. :wink:

DCBDaytona
10-11-2006, 07:13 AM
As the old tax law goes....
You can write off all you want until you get audited. :p

axkiker
10-11-2006, 07:36 AM
[QUOTE= Roll the dice and let your conscious be you guide.
C.T. :wink:[/QUOTE]
Ohh god dont say that. Ill be trying to write off everything from booze to dog food. conscious ....what conscious

axkiker
10-11-2006, 07:43 AM
My company pays for the boat and it does not have the company name on it. i just use it to take out clients not for advertisment. and the same goes for the truck. it is a company truck and is well within the guidelines. I checked and doble checked before ever buying it.
what kind of company do you own
later

Cheap Thrills
10-11-2006, 07:48 AM
[QUOTE= Roll the dice and let your conscious be you guide.
C.T. :wink:
Ohh god dont say that. Ill be trying to write off everything from booze to dog food. conscious ....what conscious
Well if you have to get the dog liquored up to carry that sign you should be good on that deduction also :rollside:
C.T. :wink:

Nautitwins2
10-11-2006, 07:48 AM
what kind of company do you own
later
THe best advice given here so far is to consult with a CPA> Everyones situation is going to be different. What might work for one may not work for another.

Dave C
10-11-2006, 07:50 AM
you absolutely cannot write off a personal use boat (principal) on your taxes unless you operate a boating type business. It is also a red flag if it is disclosed. The IRS is dead friggen serious about this and if caught he will be made an example of....
you can write off the interest on the boat loan as a second home if it has a porta-shitter and a kitchen (i.e. hot plate ;)) (as long as you don't have another second home)
you can write off the mileage that you use your car for work that is not reimbursed to you but not personal use or commute miles. There are two methods 1) actual use 2) standard mileage rate ($0.44/mile). You can probably get a bigger deduction by doing standard mileage rate than doing actual expenses and its easy. But you can look at both.
davec <------ CPA

Partycattin
10-11-2006, 07:53 AM
I'm guessing that the Bud Select is a big "Advertising" write off.

Nautitwins2
10-11-2006, 07:56 AM
you absolutely cannot write off the boat (principal) on your taxes unless you operate a boating type business. It is also a red flag if it is disclosed. The IRS is dead friggen serious about this and if caught he will be made an example of....
you can write off the interest on the boat loan as a second home if it has a porta-shitter and a kitchen (i.e. hot plate ;)) (as long as you don't have another second home)
you can write off the mileage that you use your car for work that is not reimbursed to you but not personal use or commute miles. There are two methods 1) actual use 2) standard mileage rate. You can probably get a bigger deduction by doing standard mileage rate than doing actual expenses and its easy. But you can look at both.
davec <------ CPA
What about fuel, beverages, food etc... while entertaining clients, employees, etc.... on said boat?
Just curious. Lets say that I take some employees on a houseboat trip as part of a yearly bonus? Can I write off part of that??

Dave C
10-11-2006, 08:05 AM
Yes for meals and entertainment expense (i.e. 50%). but the boat cost would have to be allocated so the amount that would be allowable is small.
What about fuel, beverages, food etc... while entertaining clients, employees, etc.... on said boat?
Just curious. Lets say that I take some employees on a houseboat trip as part of a yearly bonus? Can I write off part of that??

jbtrailerjim
10-11-2006, 08:05 AM
What about fuel, beverages, food etc... while entertaining clients, employees, etc.... on said boat?
Just curious. Lets say that I take some employees on a houseboat trip as part of a yearly bonus? Can I write off part of that??
I would say yes. My CPA tells me I can write off food & beverages should I have a customer over for dinner at my house. I would think a boat would not be different if you are entertaining customers/employee's on.

jbtrailerjim
10-11-2006, 08:11 AM
you absolutely cannot write off the boat (principal) on your taxes unless you operate a boating type business. It is also a red flag if it is disclosed. The IRS is dead friggen serious about this and if caught he will be made an example of....
you can write off the interest on the boat loan as a second home if it has a porta-shitter and a kitchen (i.e. hot plate ;)) (as long as you don't have another second home)
you can write off the mileage that you use your car for work that is not reimbursed to you but not personal use or commute miles. There are two methods 1) actual use 2) standard mileage rate ($0.44/mile). You can probably get a bigger deduction by doing standard mileage rate than doing actual expenses and its easy. But you can look at both.
davec <------ CPA
I should forward this comment to my buddie who just bought a toy hauler and slapped his company heating and A/C business logo across the back door. He told me he is going to write off the toy hauler. I told him he better ask his CPA first. Because I didn't think he could write anything except the interest from the loan.

Dave C
10-11-2006, 08:22 AM
I run into this all the time with cars and trailers, etc. etc.. I think people exaggerate a little only because the details are so complicated who wants to figure them out anyway. :rollside:
Most of the time people say they are going to "write something" off but in reality once all the rules are applied only a partial amount, (i.e. the interest) gets a write off. but then you tell all your friends that you are going to write the whole damn thing off. basic human nature to exaggerate a little ;) :rollside:
now if someone writes the whole thing off as advertising... well then I hear they have a nice golf course at the federal penitentiary
I should forward this comment to my buddie who just bought a toy hauler and slapped his company heating and A/C business logo across the back door. He told me he is going to write off the toy hauler. I told him he better ask his CPA first. Because I didn't think he could write anything except the interest from the loan.

C-2
10-11-2006, 08:52 AM
Thankfully I've never been audited, even though I've been thru a rocky business tax road, including a visit from a revenue officer. :220v: :220v:
My sister and her husband always file aggresive returns and explain it to me this way....
If you lie, cheat and steal (so to speak) for five years, and as a result, come out ahead by $10K each of those years, then you have $50K. You get audited one of those years, and get set back by $5K-$15K. But aren't you still ahead?
I always say hummmmm.....

YeLLowBoaT
10-11-2006, 09:03 AM
I sure hope he documents every thing... every time he takes it out, every client he takes out. Other wise he has no proof that its used for buz purposes. Now if he ever uses it for other purposes he will only be able to write of a % of the boat... its the same thing with "company cars" the only way you can prove it is to have a log.
Writing stuff off like that is just dumb... It takes very little to start a aduit... Don't fook with the IRS, they have a big dick and don't use lube. :)

Thorsinc
10-11-2006, 09:04 AM
Just because you can do something doesn’t mean it’s the best idea to do it. That’s why you need good CPA. Life is a lot easier to pay couple extra bucks than trying to justify your action to the IRS for a few dollars.

Cheap Thrills
10-11-2006, 09:07 AM
Don't fook with the IRS, they have a big dick and don't use lube. :)
Thats some Sig Line material right there ! :D
C.T. :wink:

Tequila-John
10-11-2006, 09:08 AM
Great info Dave C

707dog
10-11-2006, 09:10 AM
I Think It All Deoends On What Kinda Boat He Has!!! I Write Mine Off On My Taxes As A Second Home! As Long As It Has Running Water A Place To Cook And A Bathroom And Also Spend More Than 14 Days A Year On It, Im On Mine That Much In A Month..lol..but Thats In Cali Im Not Sure If That Differs From State 2 State....tell Ya Bud Dont Become A Victim And Have Some Dick Driving His Boat Around That He Picked Up @ The State Auction For $500...it Happins...OWW AND ONLY THE INTREST GETS WRITTIN OFF!!

707dog
10-11-2006, 09:12 AM
I Think It All Depends On What Kinda Boat He Has!!! I Write Mine Off On My Taxes As A Second Home! As Long As It Has Running Water A Place To Cook And A Bathroom And Also Spend More Than 14 Days A Year On It, Im On Mine That Much In A Month..lol..but Thats In Cali Im Not Sure If That Differs From State 2 State....tell Ya Bud Dont Become A Victim And Have Some Dick Driving His Boat Around That He Picked Up @ The State Auction For $500...it Happins...

socalmofo
10-11-2006, 09:23 AM
Being audited is no fun! Being self employed you seem to be audited WAYYYYY more than the average individual.
I needed a mileage log for an agent and she said "Make one up". It really wasn't a that bad of anexperience. The IRS agent I dealt with was very knowledgeable and was also very helpful. They are not as mean as people think.
The worst part aout it is the stress wondering what you will have to pay for 6 months!

Dave C
10-11-2006, 09:29 AM
one small problem with this strategy is that revenue agents are "human"...
if you get a nice one that is having good day or a lazy one that just wants to go home early... then you are going to have an easy time.
if you get a "buckaroo"...... holy shiat.... you better get a good lawyer, especially if they are going to make an example out of you.
We have seen it happen. Same scenario could net you a slap on the wrist or prosecution, all depending on the mood of the agent. :rollside:
Thankfully I've never been audited, even though I've been thru a rocky business tax road, including a visit from a revenue officer. :220v: :220v:
My sister and her husband always file aggresive returns and explain it to me this way....
If you lie, cheat and steal (so to speak) for five years, and as a result, come out ahead by $10K each of those years, then you have $50K. You get audited one of those years, and get set back by $5K-$15K. But aren't you still ahead?
I always say hummmmm.....

C-2
10-11-2006, 10:00 AM
one small problem with this strategy is that revenue agents are "human"...
if you get a nice one that is having good day or a lazy one that just wants to go home early... then you are going to have an easy time.
if you get a "buckaroo"...... holy shiat.... you better get a good lawyer, especially if they are going to make an example out of you.
We have seen it happen. Same scenario could net you a slap on the wrist or prosecution, all depending on the mood of the agent. :rollside:
Not talking about the visit from the agent - that was my dealio. At the end of the first visit, she said if I hadn't been forthcoming and cooperative, and started popping off about my rights - she would have seized the business on the spot. On my second visit from the same agent, with my CPA present - my CPA didn't say anything, the agent focused her attention and questions to me. Lesson learned about 941 or any "trust fund" taxes - you don't pay those, the gov get's a little pissed. ;)
I almost got her to smile once, too!
---------
I was referring more to a general audit strategy - it makes a certain amount of sense to me. Your thoughts (or any other CPA's), I would like as many opinions as possible.

YeLLowBoaT
10-11-2006, 10:08 AM
Never give a auditor a "tude", that is just asking for them to go over every thing with a fine toothed comb.

Dave C
10-11-2006, 10:11 AM
I was referring to the "lying cheating and stealing" & your sister/husband's attitude.... that could be dangerous if they meet the wrong type of auditor..... look out.
generally speaking, being "cooperative" with the auditor is the way to go. Cooperative meaning, answering their questions without elaborating too much. Once they can check all the boxes off their dumb little list they will leave. The faster you can get them finished the sooner they will leave.
Remember its only what they can prove, they know nothing unless they find it or you tell them. So just sit there and look "innocent" :crossx:
Yes they take payroll (941) taxes very seriously. its a fiduciary issue. Mess around with payroll taxes, you get it from behind without the common courtesy of lube or a reach around. :rollside:
Not talking about the visit from the agent - that was my dealio. At the end of the first visit, she said if I hadn't been forthcoming and cooperative, and started popping off about my rights - she would have seized the business on the spot. On my second visit from the same agent, with my CPA present - my CPA didn't say anything, the agent focused her attention and questions to me. Lesson learned about 941 or any "trust fund" taxes - you don't pay those, the gov get's a little pissed. ;)
I almost got her to smile once, too!
---------
I was referring more to a general audit strategy - it makes a certain amount of sense to me. Your thoughts (or any other CPA's), I would like as many opinions as possible.

Focker
10-11-2006, 10:20 AM
Im An Irs Auditor
Can Everyone Please Give Me Your Full Name, Phone Number And Email Address
Thank You

C-2
10-11-2006, 10:21 AM
I'm sure most business owners are savvy enough not to give anybody tude while being audited (at least, I hope so) :)
Actually (and I guess I didn't phrase my question right), I was asking about filing aggressive returns, as opposed to safe returns.
Numerically it seems to make a certain amount of sense, sans the inconvenience of an audit.
I'm sure you have clients that are pushing the envelope - in the end, do they come out on top?

RitcheyRch
10-11-2006, 10:32 AM
Excellent advice. :p
As the old tax law goes....
You can write off all you want until you get audited. :p

Dave C
10-11-2006, 10:37 AM
LMAO - focker.
C-2.... yes you will probably come out ahead. But be careful with the "typle of omission" because you are talking a chance that you will not be "made an example" of by the IRS.
technically, lying on your taxes is a crime.
so for the same omission an auditor can either take the position that you made a simple error in the omission, so you pay the tax (no harm no foul) OR a different auditor can take the position that you maliciously sought to evade taxes, in which case you are prosecuted for a crime. (possibly a felony)
This is especially true where the law is clear cut which is mostly the case for individual and business deductions most of you are aware of (it doesn't matter if you don't understand them) Any cheating should take place where the law is "grey" because at least your lawyer can argue that it "depends on the interpretation" of the law. (this may not make sense unless you are familiar with the actual law)
I am more of a "run with the scissors" type but I don't cheat on income and deductions (at least not too much) ;)

C-2
10-11-2006, 10:56 AM
Thanks Dave C - excellent info and clarifications. You da tax man.
http://www.***boat.com/image_center/data/520/1132happy0158-thumb.gif

Rexone
10-11-2006, 12:10 PM
To make a long story short a friend of mine owns a company. He has his Co. logo up and down the sides of his boat. He says he can write off the payment because its advertisement. Im thinking about going into business myself and this sound like a great idea if its legit. However I dont see it being legit.
As said above, you can write off anything you want. Just be prepared to substantiate it when they audit this red flag trigger. If the boat's not used for business purposes, the unrelated advertisement angle will fly about as far as an ostrich can.

Jbb
10-11-2006, 12:29 PM
Im writing Brown off this year......He's constantly borrowing money for Cigarettes,booze,and hookers.....

YeLLowBoaT
10-11-2006, 01:47 PM
Im An Irs Auditor
Can Everyone Please Give Me Your Full Name, Phone Number And Email Address
Thank You
You want my SS# too... I get audited every year... It sucks living with a former lead auditor for FTB...On the plus side she does wonders with my return.