Yacht Tax
Advisory
- Defensible Positions
- Clean Documentation
- Audit-Ready Posture
Yacht ownership, charter activity, and major refits can create tax exposure where timing, use, and documentation all intersect. Our work is built around one objective: positions that are coherent on the facts, supported by records, and defensible if reviewed.
Speak with an advisor
A short call to identify your key exposure points, documentation priorities, and the right next step.
Where yacht owners need the most support.
- Personal vs. charter day tracking
- APA reconciliation
- Expense allocation (direct / indirect)
- §280A residence test
- Bonus depreciation eligibility
- Refit categorisation (capital vs. repair)
- Binding contract review
- MACRS recovery period
- Bank & card reconciliation
- Historical transaction categorisation
- Vendor & payroll records
- Clean general ledger
- Gross vs. net broker reporting
- APA tax treatment
- Seasonal profitability analysis
- Direct booking documentation
- Monthly P&L summaries
- Fuel, crew & provisioning tracking
- Maintenance period analysis
- Budget-vs-actual reporting
- EA representation before the IRS
- Audit-ready documentation
- Charter use substantiation
- Exam & correspondence support
- LLC vs. personal ownership
- Foreign entity & flagging
- State registration & tax impact
- Annual reporting by structure
- Use tax by state & itinerary
- Purchase structuring for sales tax
- State income nexus (in-state days)
- Multi-state filing requirements
Bonus depreciation phase-out — timing of acquisition and placed-in-service matters.
Notice 2025-11 provides interim guidance on the additional first-year depreciation deduction under §168(k). The phase-down schedule means eligibility percentages differ based on when property is acquired and when it is placed in service. Written binding contract rules affect whether property is treated as acquired before the relevant phase-down date — a distinction that can change first-year deductions significantly for owners planning purchases or major refit schedules.
Charter vessels and passive loss rules — the personal-use day calculation is central.
Under §469 and §280A, whether a yacht owner can deduct losses from charter activity — and in what year — depends on the ratio of personal use days to charter days. If personal use exceeds 14 days or 10% of the days the vessel is rented at fair market value, the vessel is treated as a residence under §280A, which restricts deduction ordering and may eliminate net losses entirely. Proper day-counting documentation throughout the year is non-negotiable if loss deductibility is an objective.
State nexus and use tax — where the yacht operates creates exposure beyond federal.
Many owners focus on federal filing while underestimating state-level risk. Florida, California, and several other coastal states impose use tax on vessels brought into state waters, even temporarily. States with income tax may also assert nexus based on itinerary and time spent in-state. MFS reviews state exposure as part of every yacht ownership engagement — including purchase structuring that can affect sales tax liability at acquisition.