Yacht Hobby Loss Deduction Denial Upheld By Eleventh Circuit

A couple fighting a tax bill over hobby losses from chartering their yacht lost their challenge to have the deductions treated as above the line, with the Eleventh Circuit affirming a US Tax Court ruling.

Carl and Leila Gregory owned the Lady Leila and conducted charter activities during 2014 and 2015 as a hobby. The venture generated income but also incurred expenses, some of which the couple deducted under tax code Section 183(b)(2) and placed “above the line,” as deductions which reduce gross income. The IRS determined that these deductions were miscellaneous itemized deductions and “below the line,” which are ...