Charter captains will be getting crushed

[MakoMike]

Originally Posted by Mr. Sandman

The number of Charters are dropping as prices rise too and also the number of charter fishermen are increasing to subsidise their fishing/boating habit with easy license courses.

Most guys don't make any money running 6 pack charters, if they do it ain't very much and it is a lot of work and hassle. You can only write off to the extent you make, I don't think you can carry the loss into other earned income....I would like to hear if you guys do that. even so, Do the numbers this is not a good business and it looks to get worse before it gets better.

Sandy, If its a valid bsuiness loss you can deduct it against your other income.

[fishonnelsons]

My accountant told me to show a profit this year, my third year in business. The "hobby" rule is linked to the five year everyone has been talking about, but my guy strongly suggested to do it sooner than later. Everyone's situation is different, and with different risks - I would just say listen to what your person tells you to do, they're the experts.

[Roger]

Originally Posted by fishonnelsons

My accountant told me to show a profit this year, my third year in business. The "hobby" rule is linked to the five year everyone has been talking about, but my guy strongly suggested to do it sooner than later.

It's silly to do it sooner rather than later if you have a choice, but since the hobby loss rules require showing profit in 3 of 5 consecutive years, your accountant is right on time.

FWIW, the "Hobby-Loss Rules" state that if an activity, either a business or investment, generates a profit in 3 out of 5 consecutive years the IRS must assume that you are engaged in the activity with the intent to make a profit. The IRS can however, question the validity of the specific expenses you are claiming.

If a person did not make a profit in 3 out of the last 5 years the IRS will not automatically assume that the taxpayer is not engaged in the activity with the intention of making a profit. In the absence of proof, the burden is on the taxpayer to prove by a showing of the facts for their particular circumstances that he/she intends to make a profit and have a reasonable expectation of eventually being able to do so.

Hope this helps.

[fishonnelsons]

Thanks Roger, that clarifies it even for me. My guy mutterred something like "pigs get slaughtered" when we were talking about it, and he made his point.