Conversion of Charter Sailboat to Personal Use - How to fill out 1065 in TT Business.
My wife and I are partners/members of a partnership/LLC that owns a sailboat. The boat was purchased and put in service in October 2021 with a charter management company. The boat is registered with the U.S. Coast Guard. It's charter base has always been Tortola, British Virgin Islands. We have been careful to meet all the active participation/management tests and avoid passive activity designation. In May 2025, we terminated our contract with the charter manager, sailed the boat to Annapolis, MD and, on July 3, 2025 flew home to Colorado. The boat has been listed for sale starting in 2024 although we continued to pursue the arrangement with the charter manager unitl May 2025 and believed we might find another manager until we arrived in Annapolis on June 30, 2025, at which point we decided to convert the boat to personal use. We believe the conversion date is when we left the boat on July 3.
My question is how do I report this conversion-to-personal-use? The "Disposition" section of the Asset Entry Wks allows me to enter the conversion date and apportions the annual depreciation accordingly. However, there is no sale, yet, and an Asset Sales Price of $0 produces a significant Asset Loss. How do I correctly report this conversion in TT? FYI, the Type of Asset for this boat is "Z Other". We classify it as Asset Class 00.28 - Vessels, and, due to the foreign location, are required to use the ADS system - S/L depreciation over 18 years. Because ADS is required, the boat is not Qualified Property. We classify the boat as listed property since it is used for transportation and, perhaps, entertainment. Sorry if this is TMI.
