Boat Office

Today TaxMama hears from Keith in the TaxQuips Forum, with an interesting question. “There’s no office space near me, so I want to buy a boat as the office for my C Corp. I could easily maintain a log for any recreational use to facilitate separating business and personal use.”
http://taxmama.wpengine.com/forum/taxquips/boat-office/


Dear Keith,

That’s an interesting idea.

Generally, it’s not wise to have a C-Corp buy an appreciating asset, since the sale is double-taxed. But boats don’t tend to appreciate in value, do they? And if not cared for really well, they depreciate rapidly.

So, yes, buy it. Definitely keep a log. But I’d suggest that when you use it personally, you should pay the corporation rent for the day(s). Determine the fair market rent – print it out – and pay that for each use.

Do not use bonus depreciation or Section 179 depreciation – where you get to write the whole amount off at once. That would come back and bite you if you stopped using it for business in less than 10 years.

IRS Publication 946 explains Depreciation http://www.irs.gov/publications/p946/index.html  

You can find your depreciation class here – to determine how long to depreciate the boat – see Vessels, barges, tugs, and similar water transportation equipment. http://www.irs.gov/publications/p946/ch04.html#en_US_publink1000107513  

That’s a good start. Incidentally, you can deduct the interest on your Corporation, as well. I always hate the idea of paying rent and getting nothing permanent in return.

And remember, you can find answers to all kinds of questions about office space and other tax issues, free. Where? Where else? At www.TaxMama.com.

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  • IRS Publication 946 :: Depreciation
  • IRS Publication 946, Chapter 4 :: Determining Useful Life
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