Here's the relative information in brief:

• Increases the Code Sec. 179 $128,000 expensing limit to $250,000 and boosts the overall investment limit from $510,000 to $800,000, for tax years beginning in 2008.
• Permits a bonus first-year depreciation deduction of 50% of the adjusted basis of qualified property acquired and placed in service after Dec. 31, 2007, and before Jan. 1, 2009. The otherwise applicable "luxury auto" cap on first year depreciation increases by $8,000 for vehicles that qualify. 

For the summary of the joint committee, go here. SEE THE ACTUAL TERMS HERE--SUMMARIZED BY JOINT COMMITTEE

So, what does all of this mean for those wanting to set their boat up as a business in our Boat-As-A-Business program?

First of all, perhaps nothing!

Uncle Sam has always supported small business. He literally wants you to have a boat! In fact, if you're probably already paying for a boat--you just don't have it. You're paying taxes to the IRS that could be building equity in a new boat! The tax rules as they exist now, are incredibly helpful. Take a look...

The way the tax rules were written and in effect prior to 1/1/08, if you followed our guidelines and set your boat up as a business you could:

1. qualify for MACRS (10 year double declining depreciation), and...
2. expense up to $128,000 of your boat investment the first year
3. Write off all or a significant share of your expenses.

These tax deductions, combined with the potential income available, could cover 80-100% of your boats cost with under 50 days of charter. With available financing and available rebates, your downpayment could be 0-10%, and your cash flow $0!

Our available business plans show you this. If you would like more information on our Boat-As-A-Business Plan Go here.
If you want a business plan and more detailed tax information--please fill out this form here.

How might these new tax laws help you?

If, for any reason, you need a huge tax deduction that can offset income from other sources... For example:
1. You are at the top end of the tax table.
2. You have, or are anticipating a big increase in income this year.
3. You have a huge capital gain from real estate, stock options, or whatever--these deductions can offset that tax liability.

Imagine, you can write off up to $250,000 as an expense allowance--as long as the boat costs more than that. And/or, you can depreciate 50% of the boat this year. What could this mean just this year?

You purchase a $500,000 boat (and have a marginal tax bracket that would justify a large write off--25% or greater-combined federal/State):
You could get the $250,000 179 deduction
You could get bonus depreciation on the resulting basis or another $125,000
You then get the first years depreciation (based on the half year convention, MACRS) 10% of the basis from above--another $12,500.
In other words, a total deduction this year of $387,500--THIS YEAR!
But, as I said, you can take any portion you need of all of this. We can show you exactly how it would work, based on your situation. Want to know more?

Get the complete information here.

If you want a business plan and more detailed tax information--please fill out this form here.

If you would like more detailed information on our Boat-As-A-Business Plan Go here. Find out how the plan works. How your boat is managed. How you can use your boat as much as you like, while having it professionally maintained to better than private owner standards.

Our business plan (request above) will show you how the cash flow works and how the tax advantages work--based on your situation.
 

Maybe, maybe not.

Ultimately, it is wise to talk to your tax advisor to optimize your situation.

However, the decision itself, in the end, is yours. Your tax advisor is busy and may not fully understand this program. Right now, (s)he probably doesn't have time to figure it out.

We've found that about 50% of tax advisors will say no to the idea without fully understanding why this approach works. (The other 50% enthusiastically endorse the idea--if you can't find the right advisor, we can refer you to one.) Keep in mind, we've already helped over 650 people set their boat up as a business--successfully.

Far from encouraging an audit, when you follow our guidelines, you are very unlikely to be audited--however, if you are, as 3 others have been, you will have the tools and knowledge to get through it simply and easily. Not one of the people who followed our guidelines lost a single dollar of tax deduction claimed!

The disadvantages of delaying a decision...

Timing is everything!
If you can get a boat for this spring, that's ideal (ask us what's available). You can qualify for a full years of tax advantages and get income to cover cash flow this year.
There are other scenarios that work, including getting a boat in the fall and having it go directly to the Islands.

Talk to us to better understand how to optimize your situation. But, if your tax advisor isn't ready to talk right now--don't delay. Keep moving forward and let him catch up later. The most important thing is that you get and understand the information that we can provide. 410-263-2311
If you would like more information on our Boat-As-A-Business Plan Go here.
If you want a business plan and more detailed tax information--please fill out this form here.

In Annapolis since 1972, still owned and operated by the founder, Eric Smith. We're located on the harbor, in the U.S. cruising capital, Annapolis. We have helped 1,000's of owners customize their boat to meet their specific requirements. We offer full yard and commissioning services, Sailing courses and charters, financing, insurance and complete services in every category.

 

Visit our capable and knowledgeable professionals at our office On the Harbor, 2nd and Spa Creek (next to the Chart House Restaurant, in the Yacht Haven Marina.) Email: info@bayacht.com Phone 410-263-2311.

HOURS: Mon-Fri.: 9:00 to 5:00 Sat.: 10:00-4:00 Other times by appointment.

To meet us any time, including outside of the hours shown, please give us a call at our office anytime: 410-263-2311