I opened a business to operate boat rentals. We are in the process of buying the boat cash. Does it make a difference if the title is in the business name vs personal?

[nat-dubois]

How would we account for a business asset vs having the boat in our personal name but for strictly business purpose.  We do not plan on using the boat for personal use at all.

[Critter]

Define "we" ... is this a partnership?

[nat-dubois]

"We" is my husband and I.  We file married - jointly and we are both on the LLC.  Thanks!

[rjs · Accepted solution]

An LLC owned by spouses in Florida is treated as a partnership for income tax purposes. That means the boat has to be owned by the partnership. The asset will go on the partnership's tax return.

The partnership has to file its own Form 1065 tax return. Part of the partnership return will be a Schedule K-1 for each partner. You each have to enter the information from your Schedule K-1 in your personal Form 1040 tax return. It is not self-employment and does not go on Schedule C.

To prepare the Form 1065 partnership tax return you need TurboTax Business, which is a different product from Home & Business. TurboTax Business is not available online. It's available only as a CD or a download to install on your own computer, and only for Windows, not for a Mac. TurboTax Business cannot prepare your personal Form 1040 tax returns. You need one of the personal editions for that. The personal editions of TurboTax cannot prepare a Form 1065 partnership return.

If this is the first time you are involved with taxes for a partnership, it would be a good idea to meet with a local tax professional who is familiar with partnerships. The tax pro can explain the details to you and make sure you start off right, even if you later do the tax returns yourself.

[SweetieJean]

<a rel="nofollow" target="_blank" href="https://www.irs.gov/businesses/small-businesses-self-employed/partnerships">https://www.irs.gov/busi...>

[nat-dubois]

This helps tremendously.  Thank you for the information!

[TomYoung]

If you'll be reporting this income on Schedule C - "Profit or Loss From Business" -  to be included on your Form 1040 then it really doesn't make a difference from an income tax perspective how the boat is titled.  If you are operating this business as a sole proprietor or have organized a single-member LLC for this purpose, (an LLC that hasn't elected to be taxed as an S-Corp or C-Corp), there's no distinction - again, from an income tax perspective - between "you" and the "business."  So in either case the boat would be a "business asset" to be capitalized and depreciated as a single-member LLC is considered a "disregarded entity" by the IRS.  That is, to the IRS the LLC doesn't exist.

Tom Young

[rjs]

But, as Critter#2 pointed out, if "we" means that someone else is involved, the whole picture changes. If "we" includes anyone other than your spouse, your business is a partnership. In that case the boat would have to be owned by the business.

If the business is a corporation (C corp or S corp), or an LLC that has elected to be treated as a C corp or S corp for tax purposes, then the boat has to be owned by the business.

If you and your spouse are the only owners of the business, things get a little more complicated, and you may have some choices. It depends on whether or not the business is an LLC, and on what state you live in. If this is your situation, post more details.

[nat-dubois]

Thanks for the response!  "We" is my husband and I.  We are both on the LLC.  Not sure if this information is relevant, but figured I'd provide additional information just in case.  We file married - jointly and my husband has a full-time job, which he receives a W-2 for.  I do not have a full-time job, but do have a separate single-member LLC, which I use to do consulting.  We live in FL. The reason we are debating this is due to the Marina raising issues about boat owned by businesses.  I want to do it right, so if it's an issue with the Marina we can find a different one if necessary. Thanks!

[SweetieJean]

See answer below.