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Wake related business/website and tax write offs: 101

 
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Rhawn
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PostPosted: Jun 11, 2008 4:59 pm    Post subject: Wake related business/website and tax write offs: 101 Reply with quote

Lets say you owned a wake related business or website, and attempted to make a profit from said venture. How much of your boat time / gas / expenses / equipment are tax deductible? If you are snapping pics for content, articles, etc.

Holy crap wrong forum, can someone please move this to business.....

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jryoung
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PostPosted: Jun 11, 2008 9:51 pm    Post subject: Reply with quote

All ordinary and necessary business related expenses would be deductible. So if you use your boat 50% of the time for pleasure and 50% for business then you could deduct 50% of your expenses.
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Wakebrad
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PostPosted: Jun 12, 2008 7:30 am    Post subject: Reply with quote

If you do this, do you need to put commercial insurance on your boat?
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Rhawn
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PostPosted: Jun 12, 2008 8:05 am    Post subject: Reply with quote

Good question. What are the other implications and reqs for doing this?

Calling K-Dub and Flixmaster!

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K-dub
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PostPosted: Jun 12, 2008 10:37 am    Post subject: Reply with quote

Rhawn, just got the p.m. link.


shoot....wish I could be of some more assistance here, but all sides of the business that would fall into that kind of realm are dealt with by our corporate office.....I literally have NO experience on this side of things. I run the day to day side of things here, and that's about it.


jryoung and corporate would be the best two guys for info on the Tax side of the business venture, for sure. They are who I would go to for this info., if I were looking. Wink
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brew
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PostPosted: Jun 13, 2008 9:53 am    Post subject: Reply with quote

Quote:
All ordinary and necessary business related expenses would be deductible. So if you use your boat 50% of the time for pleasure and 50% for business then you could deduct 50% of your expenses.


This is true. However, depending on what exactly the business is you could probably get closer to 100% business use. I would put advertising on the boat, truck, whatever to show there is a business use and then do as much photography as you can. Even if you're out screwing around take pictures and keep them stored. If you use 1 out of every 50 pictures, but you keep the pictures, you would likely be able to make the argument that each use of the boat was business related. Also, keep a log of when the boat's used and any business purpose of that use, because if you get audited the IRS is going to want logs and documentation.

You will likely need to depreciate a portion of the boat also for the business use and will then have a gain on it when you sell it. As long as you continually trade that gain will get pushed further down the road. I would also take gas, equipment, insurance, maintenance, mileage on the truck to pull it, etc.

All that being said, if this is something that is going to generate a few thousand in sales a year, you'll lose on a high business % use. Also, if it's not something that is truly wake related you'll lose. It can't be some little side business that you just put pictures of your boat up on the website.
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jryoung
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PostPosted: Jun 14, 2008 12:10 pm    Post subject: Reply with quote

Yep, what he said (thanks for putting it in detail Brew). Further, depending on the nature of the business and the use of the boat, incorporating would probably be a good idea. Given the risk of wake/boating injuries shielding yourself from any potential liability is a good idea.

I was on a double up experience ride with Greg Nelson and Co. back in 1999. We came in, picked up some riders and took them out. Some kid who couldn't really wakeboard gets out there, falls and the board split his forehead open pretty good. He gets cleaned up (he's going to need stitches) and we get back to shore. He walks up to Greg and says "I don't remember signing a liability waiver".

It wasn't my place to say anything nor my responsibility, but that douche needed to be slapped.

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brew
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PostPosted: Jun 14, 2008 1:46 pm    Post subject: Reply with quote

Quote:
Given the risk of wake/boating injuries shielding yourself from any potential liability is a good idea.


To further this thought, anyone that owns a boat should have an umbrella policy. You're one bad fall, one stupid kid on a jet ski, one idiot, etc. from getting sued. People with boats (especially the ones that a lot of people on here own) are thought to have money which a lot of people look at as an open wallet. Umbrella's are fairly cheap in today's market and in my mind are a necessity.
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Rhawn
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PostPosted: Jun 15, 2008 9:25 am    Post subject: Reply with quote

brew wrote:
All that being said, if this is something that is going to generate a few thousand in sales a year, you'll lose on a high business % use. Also, if it's not something that is truly wake related you'll lose. It can't be some little side business that you just put pictures of your boat up on the website.


Thank you for the replies. Can you expand on what you mean above by 'lose' in both cases? Lose $$ on the tax deduction?

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brew
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PostPosted: Jun 15, 2008 6:37 pm    Post subject: Reply with quote

If you get audited you would likely lose the deductions and the IRS would hit you for back taxes, penalties, and interest.

You're perfectly capable of taking as a deduction whatever you want to. Virtually the only time it ever gets questioned is under audit. However, if you are reasonable with your deductions, you may never get audited.

That's why I stress the fact that you need to be reasonable with your deductions. If you're generating only a little bit of sales, don't try to deduct very much. If you're generating 6 figure sales, then you can probably slide by taking most of the boat usage.
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Rhawn
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PostPosted: Jun 16, 2008 9:03 am    Post subject: Reply with quote

brew wrote:
If you get audited you would likely lose the deductions and the IRS would hit you for back taxes, penalties, and interest.

You're perfectly capable of taking as a deduction whatever you want to. Virtually the only time it ever gets questioned is under audit. However, if you are reasonable with your deductions, you may never get audited.

That's why I stress the fact that you need to be reasonable with your deductions. If you're generating only a little bit of sales, don't try to deduct very much. If you're generating 6 figure sales, then you can probably slide by taking most of the boat usage.


Understood. I'm not just looking to write off my boat expenses to some made up business. I run a couple monetized websites and pay out of pocket for content creation, advertising, etc. So if I use my own boat and camera and whatnot for content creation, its legit. Keep logs, times, receipts, it shouldn't be a problem. Don't go apeshit with the deductions, be reasonable, etc.

Thanks for the advice, all very helpful.

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