Paying for a Day Sail

Scott T-Bird · Mar 16, 2016

Who's taking the tax deduction? You, as the donor of the service, or the person who is "paying" for the service? I'm not sure how those things work out but it seems to me that only one person can claim the deduction, not both. Why is that important? I'm not sure, but it seems that if you are acting as a business, not just a 'friend' of the charity, you are subject to commercial rules. If it is pretty informal, and everybody knows each other, and nobody gets hurt, then I suppose "no harm, no foul" But if you don't know the customer and something goes wrong, watch out.

Jackdaw · Mar 16, 2016

We do this at our club and our lawyers looked at it. Their opinion was no, if the organization or the skipper of the boat does not receive compensation for the sailing then it's not for hire .

Make sure everyone's insurance up to scratch however.

uncledom · Mar 16, 2016

Like Jackdaw mentioned, inform your insurance company.

Justin_NSA · Mar 16, 2016

The liability aspect is interesting. Not to hi-jack this thread, but a similar situation: I organize a few boat 'captains' to take some teens out for an hour sail once a year on our lake. Like the day sail situation above, I wonder who is liable if a kid gets hurt and the parents sue? Me as the organizer or the boat owner it happened on? I have insurance, but should we be having them sign a waiver? Would a waiver even hold up in court?
As they say, no good deed goes unpunished.

Jackdaw · Mar 16, 2016

I'm not sure you need to inform your insurance company. You're within the stipulations of your policy.

Just be insured.

But the simple fact is that anytime anyone outside your immediate family steps on your boat, you have a liability exposure. If its an organized event, so does the organizer. We race both our boats and this is a reality we have to live with. The YC knows it too, they are insured up the wazoo. And its very rarely your friend that sues you. It's their insurance company.

capta · Mar 16, 2016

Justin_NSA said:
The liability aspect is interesting. Not to hi-jack this thread, but a similar situation: I organize a few boat 'captains' to take some teens out for an hour sail once a year on our lake. Like the day sail situation above, I wonder who is liable if a kid gets hurt and the parents sue? Me as the organizer or the boat owner it happened on? I have insurance, but should we be having them sign a waiver? Would a waiver even hold up in court?
As they say, no good deed goes unpunished.

Hey, this is America! Everybody involved is going to be sued, even the kid running the pump out boat!

Scott T-Bird · Mar 16, 2016

Jackdaw said:
Edit - the Person paying for the ride (AKA making the charitable donation) takes any tax credit. At this point is no different than if the prize was for someone coming to sing and play your piano at a dinner party. That might piss off some local musicians union, but the IRS will not care. They just follow the money.

See, that doesn't make sense to me. A private golf course (in the business of selling rounds of golf) donates a round of golf to a charity. The money that gets donated comes from a customer who is buying a round of golf. He or she pays for, and receives, a service. The golf course receives no money for the service they provide (which includes personnel, maintenance, insurance, property taxes, etc.), so why don't they get the tax deduction? Theirs was the actual donation, not the golfer's.

In the case of a private sailboat owner giving a ride to a charitable donor, I can see it as the opposite. The sailboat owner doesn't normally accept money for giving rides to friends and family, so the donor can be perceived as merely a friend who has made a charitable donation.

I know it's silly to split hairs like this, it's just where my mind goes sometimes!

Jackdaw · Mar 16, 2016

Scott T-Bird said:
See, that doesn't make sense to me. A private golf course (in the business of selling rounds of golf) donates a round of golf to a charity. The money that gets donated comes from a customer who is buying a round of golf. He or she pays for, and receives, a service. The golf course receives no money for the service they provide (which includes personnel, maintenance, insurance, property taxes, etc.), so why don't they get the tax deduction? Theirs was the actual donation, not the golfer's.

In the case of a private sailboat owner giving a ride to a charitable donor, I can see it as the opposite. The sailboat owner doesn't normally accept money for giving rides to friends and family, so the donor can be perceived as merely a friend who has made a charitable donation.

I know it's silly to split hairs like this, it's just where my mind goes sometimes!

For this to work, someone has to offer something for FREE. If everyone wants some value, then it doesn't work, and its just a business transaction. But I'm not a tax lawyer. This gets complex fast when the donation is normally a paid service or product.

Scott T-Bird · Mar 16, 2016

Yes, my point exactly about the golf course (they offered the round for free) ... Now, if the golfer purchased the round of golf, but never makes it to the golf course, then I suppose the golfer should get the tax deduction (because in that case the golf course never provides the service for free)!

What a tangled web!

Capt jgw · Mar 16, 2016

I have done this for our church. And being members, the people talking the ride are friends. I would not do it for someone I don't know.
I am a USCG licensed Master, so I'm legal as far as that is concerned. However, I'm in Michigan where all charter boats must be inspected by the DNR, and mine is not. Donating the ride could be considered a charter so the inspection would be required if the DNR were to get involved. Add to that the USCG requires the boat to be documented for"coastwise trade", which again mine is not. It's all really grey whether it's a charter or not. Probably going to come down to: If nobody gets hurt, it's not a charter. If they do, it is. These things can go either way in court.
Also keep in mind I make money teaching USCG
license courses, so of course I'm going to say you need the license.
So of you choose to do it, do it for friends only, make sure your insured, and be careful.

Jackdaw · Mar 16, 2016

Scott T-Bird said:
Yes, my point exactly about the golf course (they offered the round for free) ... Now, if the golfer purchased the round of golf, but never makes it to the golf course, then I suppose the golfer should get the tax deduction (because in that case the golf course never provides the service for free)! What a tangled web!

I'm also pretty sure that the winning bidder for the donated prize can only 'claim' the difference between what they paid and fair market value for the prize. If you bid $300 for a 1/2 day cruise that had that same FMV, you can't claim anything. Bid $1000 and you sure can.

Gunni · Mar 16, 2016

Like Capta says, if something happens you can bet everyone involved is going to get sued, with the negligent and deep pockets at the fore. You can have people sign a waiver, but that can be laid aside in court. So you practice safe boating and you make sure your umbrella liability policy is in place and applicable. You may not be a licensed captain, but you better perform like one! Bring em home safe and sound.

Randy Rohrbeck · Mar 16, 2016

Scott T-Bird said:
Yes, my point exactly about the golf course (they offered the round for free) ... Now, if the golfer purchased the round of golf, but never makes it to the golf course, then I suppose the golfer should get the tax deduction (because in that case the golf course never provides the service for free)! What a tangled web!

The golf course won't receive any tax break because they never got any income from the free round to need a break for.

The golfer would get a donation deduction to the extent the amount they paid the charity for the round exceeds the golf courses standard rate for that round.

We used to donate evening sails for a charitable org. If we purchased items for the sail such as food and adult beverages we would deduct those expenses as a charitable contribution. The value for the use of the boat and our time was not.

The first time we did the sail I did check with our insurance agent to make sure we were covered. I think that would always be a good idea.

Ron20324 · Mar 16, 2016

+1 for Jack in post #3. Our 600+ member sailing club around the Chesapeake Bay, Singles on Sailboats, matches up our around 100 "SKIPPERS" and would-be crew. It is in the bylaws that the skippers receive NOTHING other than food or drink for the sail. The club does, however, take in a per-day fee as a non-profit/coordinator. We try to avoid being called "captain", as that would suggest a licensed person. It all passes legal and CG and IRS muster, and has worked for 38 years now.

Kermit · Mar 16, 2016

Randy Rohrbeck said:
The golf course won't receive any tax break because they never got any income from the free round to need a break for.

The golfer would get a donation deduction to the extent the amount they paid the charity for the round exceeds the golf courses standard rate for that round.

We used to donate evening sails for a charitable org. If we purchased items for the sail such as food and adult beverages we would deduct those expenses as a charitable contribution. The value for the use of the boat and our time was not.

The first time we did the sail I did check with our insurance agent to make sure we were covered. I think that would always be a good idea.

I'm with Randy.

SFS · Mar 17, 2016

I don't understand why the golf course wouldn't get a tax deduction for giving something a value to a charity event. The round of golf had value. If there weren't tax advantages, why would businesses donate things like this to charities? The advertising value can't be it, at least at the small potatoes level.