tax advantages of guiding "professionally"??

[Jamie M]

My wife and I are building a house leter this fall, so the 19-foot Key West will be sold shortly. Since I started fishing in the Race and Fishers Island Sound, I feel like the boat is too small anyway.

My wife and I know that we will miss the boat terribly, so I'm trying to think of ways to fit a 21-footer or so into my budget. I was thinking that if I get my 6-pack license from the Coast Guard, I could declare myself a professional guide. Then, if I charged my friends a few bucks each time we go out, there might be all kinds of tax write-offs that would help offset some of the costs of boat ownership. I figure I could depreciate the boat, plus write off all the expenses (gas, marina, insurance, tackle, use of truck). If I could use those write-offs to cut down my costs (even just a little), that might make the difference between being abkle to afford it or not.

Has anyone else looked into this?

[fishweewee]

Uhhhhh, be careful.

Methinks the IRS, having read this thread (who knows) will want to challenge your status as a "bona fide" guide.

-WW

[capesams]

it will work, but a word of warning, you had better make a profitt after 3 years or its audit time.

[Slipknot]

yep, they will consider it a hobby if it doesn't show a decent profit. capesams is right.
I just asked my accountant about something like this last night.

[Jamie M]

Here's what put the idea in my head:

I have a friend whose parents have a house that is on Killington Mountain. They rent it maybe a half-dozen times throughout the year. The rental income that he gets only covers maybe 2 of his mortgage payments. But because he uses it to generate income, he gets all kinds of write-offs. Not enough to pay for his house certainly, but he is able to offset his out of pocket expenses a bit. The house will never even come close to producing a "profit", but he's able to save a little money.

That's all I was looking for. Appreciate the feedback, I figured there had to be a catch.

[JPowers]

Renting property is completely different than operating a business as far as the IRS is concerned. Apples and oranges.

Your plan, as laid out, will NOT work. What ya got there is a hobby. Losses are non-deductible.

Take my word for it. I know.

[Team Rock On]

There's an article in Marlin magazine (last months) about a similiar scenario. Some of these tournament fishermen are writing off their loses against their "real" earnings. The IRS frowns on this! As a matter of fact they could turn your plan into a disaster and tax you on the market price of your charters. Also setting up a corporation has many hidden costs such as higher commercial insurance rates, lawyer/accountant fees etc. If you want to register the trailer the corporation must own a car as well (in MA)

[Saltheart]

Take my word for it. I know.

He knows!!