• Untitled Document

    Fund Raising Season 2020-2021 is Now Open!

    Please visit our thread below to learn more about what you can do to support this website! Thanks so very much for your support of Ericson Yachts.org!

    Notice on 2020-2021 Fund Raising

If you use your boat as a business...watch out, IRS auditors are on the prowl >>>

1911tex

Sustaining Member
If you've ever owned your own business, been an entrepreneur, or
wondered what it's like doing so, this is as close to reality as it gets.
The IRS suspected a fishing boat owner wasn't paying proper wages to his Deckhand and sent
an agent to investigate him.IRS AUDITOR:“I need a list of your employees and how much you pay them".Boat
Owner:
“Well,
there's Clarence, my deckhand, he's been with me for 3 years. I pay him
$1,000 a week plus free room and board. Then there's the mentally
challenged guy. He works
about 18 hours every day and does about 90% of the work around here. He
makes about $10 per week, pays his own room and board, and I buy him a
bottle of Bacardi rum and a dozen Budweisers every Saturday night so he
can cope with life. He also gets to sleep
with my wife occasionally".IRS AUDITOR: “That's the guy I want to talk to - the mentally challenged one".
Boat Owner:
“That would be me. What would you like to know”?

mage
 

kapnkd

kapnkd
Here’s a true IRS incident that happened to me:

Back in the early 80’s shortly after obtaining my USCG Captain License, I started with a few daysailing charters - but limited to employees of the airline I then worked for that had ‘Flight Crew Layovers’ at our station.

Like many of us...I was inevitably audited later on by the IRS for a very minor oversight on something else. When she came across my included “Charter Business” - she had the look of an old Gabby Hayes type prospector who had FINALLY struck real gold after years in the desert!

She proceeded to go through every item with the intense questioning attitude of the German SS to merely discredit but a couple deductions (tools) that could be also used for personal projects.

...Because I also sailed our boat for pleasure, she was still hell bent on splitting up the business/personal sides and then hopefully disavow any of it.

She then wanted to know how many hours it was used for each and asked if I had an hour meter for the engine, to which I confirmed it did.

“Well, my husband has an airplane and knows EXACTLY how many hours are used so tell me how many hours for business and how many hours for pleasure?” She then rested back into her chair with a clear self pleased look of ‘I GOTCHA’ on her face.

I slowly rolled my eyes and then looked her straight away to respond with, “It IS a SAILBOAT. ...The engine is used only in and out of the harbor and NOT underway. To my knowledge - there are NO hour meters made to measure the wind or time in it.”

Her face went instantly blank and then with a growing frown said, “NEVER MIND, ...let’s move on to....”

Everything we went through, including two separate long meetings, was ultimately settled but for a measly couple hundred dollars! Hardly worth the time spent by the IRS or me!!

Long and short of it...Be ready should they descend or decide to audit. Even with all your receipts and records, be ready for a biased fight on their part but hold your ground.
 
Top