Business Expense Deduction

• The IRS tax code allows deductions for ordinary and necessary business expenses. If your business requires the use of a boat, then the boat may be an ordinary and necessary business expense. According the the IRS, "An ordinary expense is one that is common and accepted in your trade or business. A necessary expense is one that is helpful and appropriate for your trade or business."
  
  

Capital Expense

• You may be able to deduct the purchase price of your boat if it is a business expense, but a boat is most likely a capitalized business asset. This means that you will have to claim a depreciation deduction for each year of the useful life of the boat, so you will claim a portion of the purchase price on each tax return over several years.
  
  

Maintenance Expenses

• If your boat is a qualifying business expense then you may also be able to deduct maintenance expenses in addition to the purchase price of the boat. Maintenance expenses would include anything required to keep the boat operational for your business. Generally, maintenance deductions may be claimed in full for the year in which the expense was incurred. In other words, you claim the full amount of the expense and do not depreciate it.
  
  

Repairs

• Assuming your boat is a qualifying business expense deduction, expenses incurred in repairing the boat will also be a qualifying deduction. Some repairs may be claimed in full for the year in which they are paid, while others must be capitalized. Generally, if a repair is minor and does not extend the useful life of the boat, then you can claim the full repair expense in the current tax year. But, if the repair extends the useful life of the boat, then you will need to capitalize the repair costs and claim a portion of the coss over the remaining useful life of the boat, just as you do with the purchase price.