Many businesses have stretched the definition of
"marketing" to claim some questionable federal income tax
deductions related to their boating hobby. A recent case involving
a real estate developer illustrates how the IRS — and the
U.S. Tax Court — generally see through these tactics.
Developer angles for a deduction
The court described the taxpayer in the case as a "serial
entrepreneur." His portfolio of businesses included several
real estate developments and a beach amenities company in
Florida.
In 2005, he paid about $2 million for a 67-foot fishing yacht.
For the three years at issue, the taxpayer took the boat to several
regional fishing tournaments, but it otherwise seldom left the
dock. Nonetheless, he claimed yacht-related deductions on the
tax returns for the beach amenities business of around $394,000,
$127,000 and $113,000.
