Follow This Link For General Information On Yacht Charter Management Programs>> OR Read On For "Boat/Yacht As A Business" Programs
Catamaran Guru has been at the forefront of developing and operating the "Yacht As A Business" concept. We have not only advocated it to our yacht-buying clients, but have
personally benefited from this program. We found that most yacht owners use this program as an avenue to acquire the cruising yacht of their dreams for retirement at a huge discount. Others like ourselves use the yacht charter revenue together with the business tax deductions to reduce the costs of owning a very nice yacht that we enjoy now. Whatever your reason, Catamaran Guru's team of experts can set up your yacht charter business in compliance with tax authorities and to suit your individual financial and personal goals.
People seem to think that the Section 179 deduction is some complicated tax code, but really it is not. Essentially, Section 179 of the IRS tax code allows businesses to deduct operating expenses and depreciate the qualifying equipment purchased or financed during the tax year. Typically, when a business buys new equipment, the purchase price can be depreciated using the MACRS scale which is an accelerated depreciation schedule.
The original target of this legislation was much needed tax relief for small businesses - and millions of them are actually taking action and getting real benefits. So, if you are in the market for a new yacht, the Section 179 rule should definitely be a part of your yacht-buying strategy.
According to this law, when used as part of a business, you can legitimately divert some of the taxes that you're already paying into the sailing vessel. This in turn, creates equity in your new yacht. Therefore, buying a new yacht and placing it in charter service as a business, makes total sense to reduce cost of ownership and turn tax advantages into an investment. It is vitally important the business is set up correctly and the operation is structured to qualify for the tax benefits and remain in compliance going forward.
The PATH ACT passed in December of 2015 was made retroactive for the 2-015 tax year, making the Section 179 deduction for 2015 $500,000. In addition, the 50% Bonus Depreciation was reinstated.
Understanding Section 179 Business Tax Deduction
Section 179 Tax Deduction Limits for year 2016
2016 Deduction Limit: The Section 179 Deduction is currently $500,000. Businesses can deduct the full cost of equipment
from their 2016 taxes, up to $500,000.
2016 Limit On Equipment Purchases: This is the maximum amount that can be spent on equipment before the Section 179
Deduction available to your company begins to be reduced. The "total equipment purchased for the year" threshold is $2,000,000.
Bonus Depreciation: 50% for 2016: Bonus Depreciation is generally taken after the Section 179 Spending Cap is reached.
Note: Bonus Depreciation is available for new equipment only.
FYI: The PATH ACT passed in December 2015: The Act was made retroactive for the 2015 tax year, making the
Section 179 deduction for 2015 $500,000. In addition, the 50% Bonus Depreciation was reinstated.
Example Of Section 179 At Work For 2016
To take advantage of the current deduction and any retroactive raise, you must purchase the equipment and be placed
into service by 12/31/2016. Form 4562 covers this deduction
*The above is an overall, "simplified" view of the Section 179 Deduction
For more details on limits and qualifying equipment, please contact us directly.
If you are a US tax payer, enjoy sailing and yachting and want to own your own yacht at a substantially reduced cost, this program will work for you. Catamaran Guru's team will work with you and your tax professional to qualify your "Yacht As A Business" to legitimately take advantage of tax deductions available to you. Although the acquisition of
a new yacht may be an effective business tool to take advantage of these tax rules, the tax benefits must be carefully planned, documented and implemented to make sure that it can withstand scrutiny.
Catamaran Guru can offer you access to some of the top brands of yachts in the world. We offer the added luxury of making it possible for you to place your new yacht into service at charter bases in multiple locations around the world through affiliations with reputable charter companies like Dream Yacht and others.
There is a lot of information in these pages and we tried to make it as comprehensive as possible. But there is a lot to absorb and you may need someone to help you sort through it all and implement a plan for your personal situation. Our services come free if we represent you as the buyer.
Contact us for a consultation.
We find that explaining what this program entails is easier for yacht owners, their accountants, and other financial advisors, if some common misconceptions and questions are addressed. This list gives a clear and uncomplicated picture of the program. Read more>>
There are many things to consider and we give you a basic overview of how to qualify for tax advantages. Before you make the decision to purchase a yacht, consult with us to figure out if this scenario will be suitable for your situation. We will advise you on what size yacht you qualify for and what charter company will work for you in which location. We can discuss all scenarios with you and tailor the program for you and your family.
This article explains exactly how section 179 works and how it affects boat owners. Read More>>
While there are many skeptics and detractors to operating a yacht as a small business, we know that if it is done correctly, with a sincere intent to create a small business, which will either be profitable in the short term or in the long term through a paid-off asset acquisition, it is the correct business strategy for a yacht owner to reduce the cost of ownership. Read More>>
The number one objection from CPAs is that our business yacht management program is a passive activity and will not be deemed active participation. They contend that it can be very difficult for a boat owner to prove active participation in a boat business and qualify for small business and section 179 tax deductions. However, in 2015, a couple won their case in Tax Court on passive vs. active participation. Their success validates the model that Catamaran Guru uses when advising boat buyers regarding charter boat ownership.
We have seen many yacht businesses operated in charter programs very successfully around the world as small businesses by our clients. Offsetting the cost of ownership is a sound business strategy especially in the yacht charter business. However, there are many regulatory challenges to a yacht charter program, including complex tax laws, IRS regulations, active participation rules, profit motive and other business considerations.
The Court cases below illustrate the tax implications of yacht charter operations. Read More>>
www.sailbigdog2.com: BigDog is a Lagoon 400 that operates in the Bahamas as a bareboat yacht business and is fully booked for most of the season.
www.treasurecatcharters.com: This Lagoon 450F is in bareboat charter business in the Bahamas. The owners are very active in promoting their business with exhibits at boat shows, booking charters and promotional advertising.
www.catamaranguru.com: Our own catamaran, Zuri, a Lagoon 450S, is in the program in the U.S. mostly doing instructional charters and exhibits at boat shows and demonstrations for prospective buyers.
www.LadyKatlo.com: This Lagoon 620 is in the Luxury Crewed Ownership program doing business in the BVI and charters for approximately $30,000/week.
www.ftmcharters.com: The Voyage 500 and her crew/owners is one of the most successful crewed boats in the BVI with numerous awards for excellence!
www.sailalende.com: This Fountaine Pajot Helia 44 is in Crewed Yacht charter in the BVI. This young couple is making big waves in the industry with exceptional service.
www.irishroversailing.com: This Fountaine Pajot Liapri 41 operates between Annapolis in the summer and the Bahamas in the winter as a successful bareboat business.
www.sailseastheday.com: This Lagoon 450 is in bareboat charter in a business program
There are many such examples. Ask us about these and other legitimate yacht businesses
CPA New Jersey: Paul M. Kaplan, CPA, MBA KMMS LLC, Certified Public Accountants, New Jersey
CPA Florida: Glen H. Gopman, Stroemer & Company, LLC Certified Public Accountants, Florida
*This information is general in nature and purchasers are encouraged to seek experienced legal counsel in yacht acquisition planning and implementation. Catamaran Guru is not a licensed Tax Attorney or CPA and is not qualified to give legal advice but we can put you in touch with experts who are.