Owning a Boat Is Becoming a Taxing Business

Unfortunately, the new tax laws make it impossible to deduct the full amount of the state sales tax if one were to buy a new boat this year. In fact, deducting from one’s federal income tax much of anything having to do with boat ownership can be a pretty iffy business from now on, especially regarding the business use of a vessel.

There are new limitations on the business use of boats that are corporate assets. In general, businesses will not be able to deduct fully meals and entertainment as business expenses. The new law allows only a deduction of 80%.

What’s more, there must be meaningful business conversation throughout the time of the entertainment. The implication is that when such business affairs are conducted on a corporate-owned boat the same new rules apply.

The rules also have been changed in regard to chartering one’s vessel and boat donations, and a qualified tax consultant should be seen in these matters.

There is one clear deduction that can be made--the interest expense on the mortgage loan used to finance the boat. The kicker here, however, is that the boat must be designated as a second home. One qualification is that if a boat is claimed as a second home, the law says that the owners must occupy it for at least 14 days of the year. These need not be consecutive days.

Further, the boat must qualify as a proper dwelling unit. It must have a head, a galley, bunks and other appropriate living amenities. A taxpayer is allowed only one second home, so if one has, say, a mountain cabin and a boat, he must decide which one constitutes his second home.

Sailing Notes

A 4,500-square-foot addition to Orange Coast College’s boat house on Pacific Coast Highway in Newport Beach is planned. The expansion would be used primarily for students of OCC’s Coast Sailing Academy. The project would cost $350,000. A matching grant of $150,000 has been offered by the Harry and Grace Steele Foundation of Newport Beach. Private donations are needed to balance that amount.

The E. E. Manning Series regatta for all sailing dinghies up to 16 feet, hosted by the Alamitos Bay Yacht Club, will be Jan. 31 and Feb. 1. Contestants must be members of a Southern California Yachting Assn. yacht club.

The Alamitos Bay Yacht Club also will host and hold its second annual Keelboat One-Design Regatta Jan. 10 and 11. The regatta is open to all one-design keelboat classes with proper yacht club affiliations. Tony Fallon is regatta chairman.

The Friends of Upper Newport Bay will conduct walking tours of this ecological reserve Saturday. Tours will leave every 15 minutes between 9 and 10:30 a.m. from the corner of Eastbluff and Back Bay drives, Newport Beach.

I went musseling under the Newport Pier at low tide New Year’s Eve. The mussel pickings were good. I cleansed them in a bucket of water overnight, scrubbed and steamed them for a few minutes until the shells opened, then chopped the meat up and used it in a sauce over pasta. It was a great way to begin the new year. Another minus tide for good mussel picking is expected early next month. Don’t pick mussels during the summer months--they can poison you.