The IRS considers a business to be an activity where the primary motive is to make a profit and where the activity is operated in a business-like manner. Filming your life may be enough. You do not have to sell t-shirts and accessories.
The IRS can classify a business as a “hobby” if it fails to make a profit in three out of five years on a continuing basis (you reset and count back every year).
See: Business or Hobby? Answer Has Implications for Deductions
To claim depreciation on the houseboat, you would have to section off a portion that is only exclusively for business. If your friend is filming his life, this may be hard to do.
The same applies for the home office deduction. You can only claim a home office deduction for a space used regularly and exclusively for a home office. The home office deduction includes both expenses and depreciation. If the business portion is completely expensed, there would be no annual depreciation write off.
A boat does qualify as a “primary residence” so you can write off mortgage interest.
You can claim the home sale exclusion, but any amount written off would be subtracted from the cost basis. In addition, you will recapture deprecation in the section of the boat designated as a business property.
Any repairs and/or improvements would be prorated, with only the business portion being deductible.
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