My partner and I recently won a boat valued at 32K. I am wondering now do we keep the boat and be co-owners, or sell the boat and buy an older model using the extra money to cover the tax we are going to owe on it? I own a really old smaller boat now so we do need a bigger boat. Please give any advice.
Oh and does anyone know how the 1099 is going to work on the taxes? Do we each get one for half of the value? If we do decide to sell it how much can we really expect to get for it?
Thanks in advance
Jon
To Sell or not to sell boat
PM Sent
jon, check your PM.
Ken Mah
Ken Mah
Re: To Sell or not to sell boat
sorry, bump. Need advise.
Re: To Sell or not to sell boat
Hey Jon, First off, congrats on the win!!
I would think most of this revolves around how the title for the boat is made out. Are both your name and your co-anglers names on the title? Do the names have the word AND between them?
I think you really need to talk to a tax attorney to make sure you know exactly what you are getting into, regardless of the choice you make.
One thing I can tell you is that the price the tournament org places on the boat is usually inflated, and way more than they had to pay for it as well as from what I understand way more than you'll be able to sell it for... Unfortunately that is the value that will be reported to the IRS as well as the value you will be taxed on each year for your "personal property tax" which is usually about 2% of the value.
As far as what to do with the boat, I personally wouldn't really want to be a co-owner with anyone on a boat. That just opens yourself up to alot of potential conflicts - like who pays for maintenance/repairs when one of you doesn't have the money! Depending on your plans, you could sell it, pay off the taxes and buy another rig with your partner, or split the proceeds and buy your own rig. You could also keep the boat and leave things the way they are, or one of you could buy the other partner out.
Either way, if both your names are on the title, you are both going to be responsible for the income taxes on it regardless if you sell it. You will also have to pay personal property tax on it if your name is on the title whenever your county takes its "snapshot" - usually in January. (For instance I sold my first boat in May of '05, but still had to pay taxes on it this year because I was the owner in January '05, which is when they take their snapshot.
As far as how much you'll be able to get for it, it all depends on the particular boat/motor combo. Does it have the Max HP motor the hull is rated for? Has it ever been on the water? (if so, then it is "used" even if you only ran it for 5 minutes.) Are the warranties fully transferable? Some boats only have "limited" coverage after transfer of ownership. What options (if any) are on it as TM, electronics, etc.? These will all factor in on what you can reasonable expect to get for it - remember if you try to hold out for anything close to retail value, most people would rather go to the dealer because they will have color choice, option choice and more importantly they will have full dealer support on any issues that come up!
That's my $0.02. Take it with a grain of salt 'cuz I've never won a boat and been in that position!
I would think most of this revolves around how the title for the boat is made out. Are both your name and your co-anglers names on the title? Do the names have the word AND between them?
I think you really need to talk to a tax attorney to make sure you know exactly what you are getting into, regardless of the choice you make.
One thing I can tell you is that the price the tournament org places on the boat is usually inflated, and way more than they had to pay for it as well as from what I understand way more than you'll be able to sell it for... Unfortunately that is the value that will be reported to the IRS as well as the value you will be taxed on each year for your "personal property tax" which is usually about 2% of the value.
As far as what to do with the boat, I personally wouldn't really want to be a co-owner with anyone on a boat. That just opens yourself up to alot of potential conflicts - like who pays for maintenance/repairs when one of you doesn't have the money! Depending on your plans, you could sell it, pay off the taxes and buy another rig with your partner, or split the proceeds and buy your own rig. You could also keep the boat and leave things the way they are, or one of you could buy the other partner out.
Either way, if both your names are on the title, you are both going to be responsible for the income taxes on it regardless if you sell it. You will also have to pay personal property tax on it if your name is on the title whenever your county takes its "snapshot" - usually in January. (For instance I sold my first boat in May of '05, but still had to pay taxes on it this year because I was the owner in January '05, which is when they take their snapshot.
As far as how much you'll be able to get for it, it all depends on the particular boat/motor combo. Does it have the Max HP motor the hull is rated for? Has it ever been on the water? (if so, then it is "used" even if you only ran it for 5 minutes.) Are the warranties fully transferable? Some boats only have "limited" coverage after transfer of ownership. What options (if any) are on it as TM, electronics, etc.? These will all factor in on what you can reasonable expect to get for it - remember if you try to hold out for anything close to retail value, most people would rather go to the dealer because they will have color choice, option choice and more importantly they will have full dealer support on any issues that come up!
That's my $0.02. Take it with a grain of salt 'cuz I've never won a boat and been in that position!
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