2008 stimulus package question.

[Therapy]

I was sent this:

CONGRESS PASSES STIMULUS PACKAGE FEB 5TH, 2008

If you need a huge tax deduction that can offset income from other sources, this economic stimulus package can practically buy a new boat for you. Here is how it might affect you if you want to take advantage of it to get a new boat: You can write off up to $250,000 as a Section 179 deduction (as long as the boat costs more than that). And, you can depreciate up to 50% of the balance of the boat THIS YEAR.

Cost of New Boat $500,000
Section 179 Deduction -250,000
Accelerated Depreciation -125,000

Net Cost of Boat $125,000


The key is that you must buy the boat in 2008, take delivery in 2008, and place it in charter for 3 years beginning in 2008. And, while it is in charter you will continue to enjoy income and expense deductions. At the end of the 3 years, you could sell your boat or return it to private use.

Does anyone know about it?
Know any other details?
Some kind of weird fantasy?? (like I have all the time)

[Sunspot Baby]

Even IF this were true, you would have to have one h**l of an income to take advantage of a $1/4 mm deduction. Could I spread it over the next 10 years? :-)
George

[ess105]

Seems bogus to me. My CPA advised that the hull can only be depreciated over 15 years, the electronics somewhat quicker. If you start put such large deductions through you're sure to invite an audit. Maybe not what you want. See this article : Six top tax savers - I don't want to be audited! What can I do? (3) - Money Magazine
I would also argue that if you are paying over quarter of a mil a year in taxes and this write down even begins to add up you're not really the kind of guy this benefit is aimed at.

[slomotion]

I would have thought we had some tax pros onboard. I am not one, but in general the issue in qualifying for 179 expense deductions and accelerated depreciation is trade or business vs. investment. In general, if you do not materially participate in the business, it is considered to be only an investment. In general, the leasing of personal property such as a boat (as distinguished from real estate) is considered an investment even if you do materially participate in the business unless you meet certain exceptions. There is also an issue re operating a business outside the U.S.

AFAIK, the section 179 deduction is still limited to $125K and vessels are 10 year property for depreciation purposes. You need to consult a reputable tax pro with specific experience in boat charter tax issues.

[dacust]

Originally Posted by Therapy

Cost of New Boat $500,000
Section 179 Deduction -250,000
Accelerated Depreciation -125,000

Net Cost of Boat $125,000

Even if it IS legit, I'm betting you don't get to deduct those amounts from the tax you owe, just from your taxable income. So you only save the TAX on the $375,000. You save about $100,000-$125,000. So that $500,000 boat would only cost $375,000-$400,000 post-tax.

[mobetah]

You said deduction and depreciation didn't you? ..... That's a lot different than a tax credit which is what your dollar values seem to indicate!

[Pblais]

You still have to pay for the boat to take the deduction and wait three years to collect it. If you have credit enough to cover $500,000 then you don't need to wait three years.

As a general rule financial advice you get from Cruisers Forum is not worth what you paid for it.

[senormechanico]

Pblais,


Not only that, but the dollar won't be worth what it is today (which isn't much) in 3 years.

If I were a betting man, I'd short the dollar, but I don't have enough dollars to do that.

Steve B.

[Whimsical]

Originally Posted by senormechanico

Pblais,

If I were a betting man, I'd short the dollar, but I don't have enough dollars to do that.

Sounds like you have already shorted it