How to legally offset operating expenses without a Commercial License

I always told my daughters that the way to find happiness is to find your passion and then find some way to get someone else to pay you to pursue it. You will never feel like you worked a day in your life since it's so much fun to go to work. In retirement, I began to think the same way again and had an idea about photographing bridges in the California Delta as a summer project. As an engineer, pilot and air traffic controller, I always appreciated good engineering with form AND function.

I've been having fun this past summer touring 25 California Delta Bridges in 25 days as a fun thing to experience, photo and write about. It also seemed like a good opportunity for legal revenue/tax write-offs to help by offsetting some of the expenses of operating a boat on a budget. As it turned out, it was the very best summer of my life, HANDS DOWN!! I came home with over 3000 photos of our beautiful California Delta bridges...all visited by boat in the course of 25 days and nights.

My daughter, a pro photog and editor for Getty Images, gave me a BD gift of free editing of my photos for a calendar, so now I'm offering professionally edited 8x11 2020 @DeltaBridges calendars for sale on the side as a hobby. I don't expect to actually make a profit this year but I figured it's worth a shot. (See my link below if you like bridge calendars.)

I'm sure there are several folks who would like to know what you do to make boating more affordable for you. What do you LEGALLY to help offset the expenses of the lifestyle you love.

That's a great project! I've always been fascinated by architecture, enjoyed photography and imagined myself doing something similar. I'm also partial to abandoned buildings, especially old barns and such.

But nowadays, everyone's got a camera in their phone and fancies themselves a photographer. Even if they don't know enough to hold the phone in "landscape" mode. YouTube is full of poorly filmed and even more poorly edited "abandoned places" videos. Nobody buys "coffee table books" of photography any more. I think I missed my chance.

This could turn out to be a very interesting thread you started WKBO.

I run my wholesale electrical supply business from my boat.

I worked with my tax CPA very closely and I am able to write off all telecommunications, networking, and computing equipment that is installed, including my KVH satcom system. This along with recurring service charges.

There is a important point to make though. I do not have things that reduce my boating expenses. I have things that enable my business to function and for me to make a living while I happen to be on my boat.

There are no special accounting tricks. I just pay for anything that is directly business related using corporate funds, and account for those purchases just like my land based office.

Perfectly legal, and if I ever get audited it is all very defendable.

The key to business expensing is that your business has to have a reasonable expectation to make a profit. The IRS is very quick to disallow “business” endevors that exist only to allow the deduction of hobby expenses.

Have no write-offs. It is standard deduction for me, and see no hope otherwise. ... FlyWright about to come under the Golden Gate Bridge, heading west. (January 2014):

Al, with your successful fishing experience, perhaps you could operate fishing outings for profit/hire. Not that I recommend it.

I charter my boat out. Theoretically, if I get a typical number of charter bookings, the boat completely pays for itself, including loan payments, moorage, maintenance etc. For various reasons charter bookings were low last summer so we were in the red, I have high hopes for next season.

The downside to chartering the boat out are obvious. Sure, I can use my own boat any time I want, but I'm losing that potential charter income if I do it. Also, to keep within tax regulations, any time I take my boat out I need to basically charter it to myself. The charter company of course waves the charter fees, but I do need to pay tax on the normal charter fee. Not to big a deal.

The upside is my boat is always impeccably maintained and cleaned.

johnrupp said:

this could turn out to be a very interesting thread you started wkbo.

Click to expand...

wkbo?

Cool project

Once I retire (next fall) our plan is to sell photographs taken while exploring BC's north and central coast. My wife covers wildlife and macro photography while I lean towards the scenic fine art end of things.

I used to produce selenium toned silver gelatin black and white fibre based prints enlarged from 4x5 negatives using pin registered sharp and unsharp masks, but after taking it as far as I could, something seemed missing.

Now working towards limited edition polymer photogravures using digitally enlarged negatives made from scanned 4x5's and digital photos from a Fujifilm X series mirrorless camera system.

Dare to Dream!

FlyWright said:

https://www.facebook.com/groups/deltabridges

Click to expand...

Requires a Facebook account/login to see anything.

Sorry, not goin' to happen (for me at least).

I'm no where near Al's level of enjoyment / satisfaction but it helps offset some boat expenses.
When I retired I found a hardly used Sailrite sewing machine to do some of my own canvas work.
When others in my marina saw the results I quickly had requests for work.
I have been selective in choosing which to take on in order to:
1) Prioritize those I could easily barter with... diesel and hydraulic mechanics are a couple of repeat & satisfied customers
2) Keep the jobs small and within my skill level to ensure satisfied customers.
3) Small jobs to keep $ small for those not bartering and remain a hobby to avoid reporting
4) No advertising - just word of mouth and marina folks I knew and liked
Bottom line this wasn't a get rich quick scheme but rather one that facilitated building skills and offsetting costs to expand my capabilities. I now turn down more work than I take on and can be VERY selective on customers to keep satisfied.

From my boat, I run a foundation on behalf of a retiree that funnels money out of his bank account and into the marine parts and services industry. So far, it’s exceeding my wildest expectations, to the point of maybe taking on partners via setting up a GoFundMe site. Any interest out there?

(Seriously, Al, cool idea. Wish my Facebook aversion didn’t keep me from seeing some of your work.)

I was wondering how these YouTubers fund their boating trips?They certainly put a lot of work into creating and editing their episodes. Wonder what the write off options are for them. (It also helps to look like Barbie & Ken).

Flywright: I encourage you to google "hobby losses" and "IRS Section 183". I can assure you that having worked 33 years in Federal taxation, your "business" does not qualify for expense deduction beyond any revenue you may derive from the sale of photographs. In order to write off any more than that requires that you intend to make a profit. By your own statement, it is a hobby and you do not expect to make a profit. This is fatal to your interpretation of the law. I'm sure you are a competent engineer and pilot and probably photographer but not so good at tax law. You may want to re-think this before putting this on your tax return. Sorry to burst your bubble but good luck with selling your photos.

As for photography, I am a pretty good analog photographer (4" x 5" negatives) using Speed Graphic, Crown Graphic, and field cameras. When we had a dirt house, I had a terrific darkroom in the basement. Living on the boat, I can only develop negatives. An enlarger for printing negatives is not possible. However, I do scan my negatives which actually works quite well.

FlyWright said:

I always told my daughters that the way to find happiness is to find your passion and then find some way to get someone else to pay you to pursue it. You will never feel like you worked a day in your life since it's so much fun to go to work. In retirement, I began to think the same way again and had an idea about photographing bridges in the California Delta as a summer project. As an engineer, pilot and air traffic controller, I always appreciated good engineering with form AND function.

I've been having fun this past summer touring 25 California Delta Bridges in 25 days as a fun thing to experience, photo and write about. It also seemed like a good opportunity for legal revenue/tax write-offs to help by offsetting some of the expenses of operating a boat on a budget. As it turned out, it was the very best summer of my life, HANDS DOWN!! I came home with over 3000 photos of our beautiful California Delta bridges...all visited by boat in the course of 25 days and nights.

My daughter, a pro photog and editor for Getty Images, gave me a BD gift of free editing of my photos for a calendar, so now I'm offering professionally edited 8x11 2020 @DeltaBridges calendars for sale on the side as a hobby. I don't expect to actually make a profit but I figured it's worth a shot. (See my link below if you like bridge calendars.)

I'm sure there are several folks who would like to know what you do to make boating more affordable for you. What do you LEGALLY to help offset the expenses of the lifestyle you love.

Click to expand...

When I was exploring avenues to write off some of my boat expense with a qualified tax attorney he really cautioned me. There is a huge difference in what someone may be able to submit to the IRS and even get away with for a while, maybe even forever and what will survive a tax audit.

And once you get audited the fines and penalties can be killers.

To the O.P. GREAT, CONGRATULATIONS on making some money while on your boat. Take the income, declare it and enjoy what is left. Attempting to write off part of your boat expense is best left to full timers like dive boats, tour boats, fishing charters. Even then, it is risky.

pete

Slowpoke said:

I was wondering how these YouTubers fund their boating trips?They certainly put a lot of work into creating and editing their episodes. Wonder what the write off options are for them. (It also helps to look like Barbie & Ken).

Click to expand...

If they've got enough viewers and can monetize their YouTube videos (ads, etc.) they get paid for people watching their videos. So they're basically selling a window into their life to fund living that life.

catalinajack said:

Flywright: I encourage you to google "hobby losses" and "IRS Section 183". I can assure you that having worked 33 years in Federal taxation, your "business" does not qualify for expense deduction beyond any revenue you may derive from the sale of photographs. In order to write off any more than that requires that you intend to make a profit. By your own statement, it is a hobby and you do not expect to make a profit. This is fatal to your interpretation of the law....

Click to expand...

In Canada, I believe the federal government doesn't want to hear from artists about deductions until they make over $20,000.00 in a year from the sale of their art works. Here's hoping I pay taxes!!!!!

Our photographic goals are to have it self-fund itself in the way of supplies and occasionally new camera/darkroom/etching press equipment, and in a perfect world, help with the operational costs of our boat.

catalinajack said:

As for photography, I am a pretty good analog photographer (4" x 5" negatives) using Speed Graphic, Crown Graphic, and field cameras. When we had a dirt house, I had a terrific darkroom in the basement. Living on the boat, I can only develop negatives. An enlarger for printing negatives is not possible. However, I do scan my negatives which actually works quite well.

Click to expand...

You must know about APUG (Analog Photographers Users Group) that has now grown with the times and is now Photrio for analog, hybrid and digital photography? HUGE amount of experience and information there:

Photrio.com Photography Forums

Just between us large format photographers...here's a fun 4x5 handheld f2.5 SLR (yes, I said f2.5 and SLR!) camera I heard about recently. A real beast, and a significant departure from the f64 Group everything in focus aesthetic, but interesting nonetheless:

I edited the first post by adding a photo of the calendars and will post a few sample pics here to show some of the shots for those without Facebook access. Feel free to PM me if you're interested in seeing more or need contact info.

Long ago when I had a job requiring I work inside all day I would use my tractor to bush hog field and building lots, plow and till gardens, and some snow plowing in winter. Just to get outside and some fresh air. One time I got the idea to deduct some expenses so I talked to a friend who was a CPA I believe. His advice. "For what you hope to claim and to avoid the hassle's, Federal and domestic, take your wife out to dinner more often."
Wise advice...

Pete Meisinger said:

When I was exploring avenues to write off some of my boat expense with a qualified tax attorney he really cautioned me. There is a huge difference in what someone may be able to submit to the IRS and even get away with for a while, maybe even forever and what will survive a tax audit.

And once you get audited the fines and penalties can be killers.

To the O.P. GREAT, CONGRATULATIONS on making some money while on your boat. Take the income, declare it and enjoy what is left. Attempting to write off part of your boat expense is best left to full timers like dive boats, tour boats, fishing charters. Even then, it is risky.

pete

Click to expand...

"And once you get audited the fines and penalties can be killers."

pete: You received good advice from your attorney. I was once involved in an audit where the individual was offered a good compromise settlement but who decided to press forward with his bogus tax shelter arguments. Fast forward two years - he ended up paying over $1 million more, all interest and penalties.

The IRS is a shadow of its former self due to relentless massive budget cuts. Literraly, there are almost no cops left on the beat. This is not good for honest taxpayers. The chances of getting caught speeding by the IRS are lower than ever but, folks sometimes get caught in the most unexpected ways. Beware.

Slowpoke said:

I was wondering how these YouTubers fund their boating trips?They certainly put a lot of work into creating and editing their episodes. Wonder what the write off options are for them. (It also helps to look like Barbie & Ken).

Click to expand...

They could make everything a business expense. Their business is producing videos, and just like larger movie companies they would need equipment, sets, transportation to far off places, etc...

My CPA said it in a way that I understood. She said “A legitimate business has to have a reasonable expectation of making a profit, thats why legitimate businesses exist”.

A youtuber making a couple hundred grand a year and osetting that income with the expenses necessary to make that income would in my opinion be a legitimate business, but I am no CPA, just a businessman.

MurrayM said:

In Canada, I believe the federal government doesn't want to hear from artists about deductions until they make over $20,000.00 in a year from the sale of their art works. Here's hoping I pay taxes!!!!!

Our photographic goals are to have it self-fund itself in the way of supplies and occasionally new camera/darkroom/etching press equipment, and in a perfect world, help with the operational costs of our boat.



You must know about APUG (Analog Photographers Users Group) that has now grown with the times and is now Photrio for analog, hybrid and digital photography? HUGE amount of experience and information there:

Photrio.com Photography Forums

Just between us large format photographers...here's a fun 4x5 handheld f2.5 SLR (yes, I said f2.5 and SLR!) camera I heard about recently. A real beast, and a significant departure from the f64 Group everything in focus aesthetic, but interesting nonetheless:

Click to expand...

That youtube video fun camera is not a SLR. The box is a modified Graflex Speed Graphic camera. A SLR is not a through-the-lens focusing camera/lens as is the Graflex camera and many like them. The image is focused through the back flap looking diectly through the lens at an upside down image. Fine focusing is done with a focusing loupe. This is true of any lens used on a Graflex including that Aero-Ektar aeriel lens which has a sort of a cult following. It is highly unlikely that camera would be used hand-held as their no viewfinder with which to frame the picture.

catalinajack said:

That youtube video fun camera is not a SLR. The box is a modified Graflex Speed Graphic camera. A SLR is not a through-the-lens focusing camera/lens as is the Graflex camera and many like them. The image is focused through the back flap looking diectly through the lens at an upside down image. Fine focusing is done with a focusing loupe. This is true of any lens used on a Graflex including that Aero-Ektar aeriel lens which has a sort of a cult following. It is highly unlikely that camera would be used hand-held as their no viewfinder with which to frame the picture.

Click to expand...

You're right, sort of...

I must have gotten all excited about the mirror for viewing images on the cameras top surface ground glass, and from there went to SLR. Here it is being hand held during the recent impeachment hearings:

https://2.img-dpreview.com/files/p/E~TS590x0~articles/2937027624/Burnett.jpeg

Slowpoke said:

I was wondering how these YouTubers fund their boating trips?They certainly put a lot of work into creating and editing their episodes. Wonder what the write off options are for them. (It also helps to look like Barbie & Ken).

Click to expand...

And every video from the people who do it as a "living" contains a plea (i.e. beg) for money somewhere in the video.

Some smart people even set up a service that facilitates the transfer of money from the beggees to the beggars, for a cut of course.

Some of the more well known YouTubers actually have sponsors that give them equipment, services, or money in exchange for a plug.

What gets me is that people actually send them money to fund that lifestyle.

People who do YouTube videos just for the fun of it, never ask for money.

Let's start anther Photography Equipment thread for that discussion, please. This one is about using your boat in a business or operation that allows writing off or offsetting expenses with a legal profits.

I agree that any practical and legal business plan needs a path to profitability. My accountant has advised me of the same as that's her primary line of business. My new business, @DeltaBridges, does that on a smaller scale in a legal and manageable plan.

FlyWright said:

I always told my daughters that the way to find happiness is to find your passion and then find some way to get someone else to pay you to pursue it. You will never feel like you worked a day in your life since it's so much fun to go to work. In retiremen for you. What do you LEGALLY to help offset the expenses of the lifestyle you love.

Click to expand...

I agree 100%


I retired from working full time in 1992 when I sold my video stores. I was 41. I have not had a full time business or job since and started taking July to September off around 2003.

My first careers after college was in law enforcement and retail security/loss prevention. Then I was a retail executive until opening a video store in 1983.

I became a Nobeltec dealer selling VNS shortly after selling the store. Back then, older boaters were buying their first computer in order to run Nobeltec and I installed the software and offered training to use it. Received free software, training, wrote off laptop, GPS, mileage, phone.

Got a Coast Guard 50 ton license and began offering on the water Nobeltec training. Wrote off Maritime Academy tuition, books, milage and license fees. This led to working part time for a yacht time share company in Seattle as a contract (1099) checkout skipper. Wrote off mileage, tools. Which led to managing several boats in the fleet for maintenance. Which led to being a boat handling instructor for the time share company when they started Yacht School. Which led to working as a skipper for hire when the time share company started that. Was able to drive all the 180 plus boats in the fleet and clients to gain experience with different boats and accumulate sea time on boats larger than mine. Received training on various boat systems and equipment and started relationships with marine equipment dealers and manufacturers.

About the same time began becoming a dealer for a variety of marine equipment manufacturers. Sealand, Webasto, Westerbeke, Furuno, American Diesel, FloScan, Robertson etc. Benefits were equipment purchase at wholesale prices, free training, write off home office, truck expense and depreciation, computer.

Quit the time share job and started my own "On the Water" boat handling instruction business around 1995. Wrote off books, charts, milage. Which led to consulting to new boaters on choosing, how to buy, equip and handle a boat. I was not a broker. Also hired out as a skipper for hire doing deliveries and backing up captains on large yachts. Worked the license up to 100 ton. Retired that business in 2014.

Started buying marine equipment at swap meets, garage sales, Craig's List and selling on eBay. Which led to selling at marine swap meets that let me arrive early to set up which allowed me buy the good stuff prior to the start of the event. Wrote of booth fee, mileage, home office. Get to try out marine equipment that I might keep or sell.

I also had several other part time businesses simultaneously in addition to the marine field:

I started a mystery shopping consulting business where I sent people into businesses to pose as shoppers and assess customer service. We shopped banks, hardware, department and mattress stores. Wrote off vehicle mileage, phone, computer. Retired that business in 2004.

I had started a part time mobile DJ business in 1974 and was doing two to four gigs per year until 1992. After selling the video stores, started to aggressively advertise the DJ service and by the late 90's was doing 40 to 60 events per year. Got to purchase all the albums and CD's that I wanted without checking with my wife. And purchase the latest and greatest pro audio gear as the technology advanced from singles, albums, tape recording, CD's, Mini Discs, recordable CDR's to digital music on hardrives. Wrote off music, computer, audio equipment, stage clothing and mileage. Retired that business in 2017 after 43 part time years!

With all the part time businesses running at the same time, I had several Schedule C's on the federal taxes. Expenses like home office, CPA, office supplies, vehicle expenses, attorney and depreciation were prorated into the various Schedule C's. I had a dedicated laptop for each business and several phones. I had profit from the businesses and paid state and federal taxes. None were "hobby businesses".

The businesses were LLC's for personal asset protection and I carried liability and Errors & Ommission insurance.

I still sell new marine equipment to clients, but no installation, and sell new and used items on eBay. And pay tax on profit.

Out of all the businesses above, I made the most money (gross) on boat handling training, mystery shopping second and DJ'ing third. EBay sales is the most profitable (net income) and DJ'ing was second.

Working as a DJ was my favorite business and the most fun. I catered to the yacht clubs and country clubs around the PNW, which led to referrals from high end clients and elaborate weddings. I also worked corporate events, private parties and had several corporate clients for over 20 years. I never had to work a kids party or school function - no teen music! Received tips in addition to my fee and one was a $350 tip at a wedding reception!

I would have continued working as a DJ into my 70's if it wasn't for smart phones. When someone made a request for an undanceable, inappropriate or a song I didn't want to play in the old days, I would simply say I didn't have it. After smart phones became popular, when I said I didn't have a song, a guest would hand me their phone and ask me to play it. Many songs have objectionable lyrics and I only played clean versions. It's not that I am a prude. I didn't want someone at a party to be offended by the lyrics and there are always children at wedding receptions. And every event was a referral opportunity.

Starting businesses in areas of my interest and hobbies has been very rewarding- financially and personally. And I recommend it to everyone.

I am not sure I saw any intent on writing off more than breaking even which I though was the intent, and withing the IRS laws.


I have a friend I supplied pictures with for two decades that made USCG and other "action" calendars...I think he did it to write off travel and some expenses and never had an issue doing it...whether he intended to make a profit or not I don't know but whatever record keeping he did seems to have worked and he wouldn't have dne it for so long if it didn't have some benefit.

When I retired early and spoke to people about taking my boat from Ireland to Spain singlehanded they laughed at me and one said 'never in your day son'. Others simply said 'Your fecking crazy'. Some dreamed of it but never got any further than wishful thinking so when I did it I wrote a book to give others inspiration.
Publishers wanted to rip me off so I self publish on Amazon.
I enjoyed the research and writing and have so far written 5 books, I'm no Tom Clancy but I enjoy what I do and it helps a little with the diesel.
The books on Amazon are 'How To Enjoy Cruising In Retirement', How To Cruise Between Two Seas, The Wolf's Lair', 'Encore' and 'Windmills And Wine'. The e-books are obviously cheaper than the paperbacks.
I'm no photographer either and use a simple Sony Cybershot for the photo's

I think the most important thing when you retire is to keep yourself active and mentally alert and its obvious many other folk feel the same.

FlyWright said:

Let's start anther Photography Equipment thread for that discussion, please...

Click to expand...

Awwww, c'mon! When's the last time you saw two large format photographers go off on a tangent on this forum?!!?

I had considered gun running and the slave trading. Neither occupations are legal so I wouldn't be bothered by paying taxes. Then, I remembered, even at my advanced age, I am still too pretty to go to prison.