Boat Owners May Have Federal Tax Benefits Available

NEWS From BoatU.S.
Boat Owners Association of The United States
880 S. Pickett St., Alexandria, VA 22304
BoatU.S. News Room at http://www.BoatUS.com/news/releases.asp

FOR IMMEDIATE RELEASE
Press Contact: Scott Croft, 703-461-2864, SCroft@BoatUS.com

ALEXANDRIA, Va., January 19, 2009 – Recreational boat owners who paid state sales taxes on a boat purchase, or those who secured a bank loan to finance a boat, may have some tax deductions available when filing their 2008 federal income tax return.

The Sales Tax Deduction

For boat owners who paid substantial state sales taxes on a new or used boat purchase last year, the Tax Extenders Act of 2008 signed by President Bush on October 3 continues to offer a federal tax benefit with a deduction for state sales taxes. Boaters must choose either the state sales tax deduction or state income tax deduction on their federal tax return — you cannot take both.

In addition, to take the state sales tax deduction, the sales tax on a boat purchase must be applied at the same tax rate as the state’s general sales tax. In order to claim the sales tax deduction, tax returns must be itemized. State sales taxes are entered on IRS form Schedule A, line 5b.

The Boat Loan Deduction

For those owners with a secured boat loan, mortgage interest paid on the loan may be deductible from your federal income taxes. Taxpayers may use the “second home” mortgage interest deduction for one primary home and one second home and must itemize deductions on their returns. A boat is considered a second home for federal tax purposes if it has a galley, a head, and sleeping berth.

Some boaters may be unaware of this potential tax benefit because not all lending institutions send borrowers an Internal Revenue Service form 1098 which reports the interest paid. Not receiving the form does not preclude taking the deduction. If a 1098 is not available, boaters should contact their lender for the amount of interest paid and should enter it on line 11 on Schedule A along with the lender’s tax ID number. If a form 1098 is sent, boaters should simply enter the amount on line 10 of Schedule A.

Sorry, AMT

For those who fall under the Alternative Minimum Tax, most deductions are unavailable as taxes are calculated differently. Boaters are urged to contact a tax preparer or financial advisor for more information.

For more details on the mortgage deduction, go to http://www.IRS.gov and download Publication 936 or the Fact Sheets. For state tax deduction information download Publication 600, which also includes state-by-state tax tables.

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About BoatU.S.:
BoatU.S. – Boat Owners Association of The United States – is the nation’s leading advocate for recreational boaters providing its 600,000 members with government representation, programs and money saving services. For membership information visit http://www.BoatUS.com or call 800-395-2628.

Information on Supreme Court Decision

Dear List Members, Earlier this week the US Supreme Court made a decision as to whether the court would hear the appeal of a case concerning water storage in Lake Lanier.

Our attorney, Clyde Morris, who is representing us in the Tri-States litigation, has provided the following information about this decision and its relevance to Lake Lanier.

U.S. SUPREME COURT’S DENIAL OF CERTIORARI IN GEORGIA vs FLORIDA

In this case, the Corps, Georgia, the Atlanta area water supply providers, and the Southeastern Federal Power Customers (SeFPC) entered into a settlement agreement in a lawsuit filed by the SeFPC to obtain compensation for power generation that was allegedly being foregone due to management of LakeLanier for water supply purposes. Florida and Alabama intervened and challenged the agreement. The primary issue in the case was whether the settlement agreement should be upheld. The DC District Court ruled that it would, but later the DC Circuit Court of Appeals reversed and said it would not. Georgia appealed the Circuit Court’s ruling to the Supreme Court.

On January 12, 2009, the US Supreme Court denied certiorari in the case, meaning that it refused to entertain Georgia’s appeal. There was a very small chance that the Supreme Court would accept the appeal, because only a very small percentage of cases appealed to the Supreme Court are accepted and those that are must present questions that the Court deems worthy of its review. So, the Court’s decision not to allow the appeal is of little surprise to anyone. The question is: what, if any, affect will the Supreme Court’s decision NOT to hear the appeal have on us?

The immediate effect is that there is no change in the status quo in the Water Rights litigation. While it could have been beneficial if the Supreme Court had granted the appeal, we would have benefited only if the Court had ruled in Georgia’s favor on the merits of the case. Since that avenue is now moot, we will simply continue with the Water Rights litigation already going on in Florida, according to the schedule already established by that Court.

It is important to understand that it was primarily dicta (language in the DC Circuit Court’s ruling that isn’t authoritative) that has given rise to Florida’s and Alabama’s now-famous argument that water supply is not an authorized purpose of LakeLanier. I expect Judge Magnuson to include a ruling regarding that argument as part of our litigation. That issue will be addressed in Phase 1, while the claims of primary importance to the LLA – regarding the Corp’s draw-down of water in the Lake – will be addressed later, in Phase 2.