tion 179 deduction.” For more information, see
income. To deduct 100% of these meals,
Which Fishing
Publication 946.
you must report their value on any Form
1099 – MISC you file to report your pay-
Expenses Can
Travel and Transportation
ments for services.
•
Meals you are required by federal law to
You Deduct?
This section briefly explains some of the rules for
furnish to crew members of certain com-
deducting travel and transportation expenses.
mercial vessels (or would be required to
For more information about travel and transpor-
You can generally deduct ordinary and neces-
provide if the vessels were operated at
tation expenses, see Publication 463. That pub-
sary fishing expenses as business expenses in
sea).
lication also explains what records to keep.
Part II of Schedule C (Form 1040). An ordinary
fishing expense is one that is common and ac-
Local transportation expenses. Local trans-
The federal law that generally requires
cepted in a fishing trade or business. A neces-
!
portation expenses include the ordinary and
meals to be furnished to crew mem-
sary fishing expense is one that is helpful and
necessary costs of getting from one workplace
bers of commercial vessels does not
CAUTION
appropriate for a fishing trade or business. An
to another in the course of your business when
apply to fishing vessels.
expense does not have to be indispensable to
you are traveling within the city or general area
be considered necessary.
that is your tax home.
The following discussions give a brief over-
Tax home. Generally, your tax home is your
view of three types of business expenses that
What Forms Must
regular place of business, regardless of where
are of special interest to fishermen: deprecia-
you maintain your family home. It includes the
tion, travel, and transportation expenses. The
You File?
entire city or general area in which your busi-
most common business expenses for small
ness is located.
businesses are listed in Part II of Schedule C.
For more information on business expenses,
If you have a fishing trade or business, you may
Commuting expenses. You cannot
see Publication 535. There is also information
!
need to file the following forms.
deduct the costs of traveling between
on specific business expenses in Publication
your home and your main or regular
CAUTION
Schedule C (Form 1040)
334.
place of business. These costs are personal
commuting expenses. You cannot deduct com-
Depreciation
Use Schedule C (Form 1040) to figure your net
muting expenses no matter how far your home is
profit or loss from a fishing business you operate
from your regular place of business. You cannot
or a trade you practice as a self-employed indi-
If property you acquire to use in your business
deduct commuting expenses even if you work
has a useful life that extends substantially be-
vidual. To figure your net profit or loss, subtract
during the trip.
yond the year it is placed in service, you gener-
your deductible fishing expenses from your
gross income from fishing. File Schedule C with
ally cannot deduct the entire cost as a business
Travel expenses. For tax purposes, travel ex-
your Form 1040.
expense in the year you acquire it. You must
penses are the ordinary and necessary costs of
spread the cost over more than one tax year and
traveling away from home for your business,
You may be able to use the simpler
deduct part of it each year. This method of de-
TIP
profession, or job. You are traveling away from
Schedule C – EZ (Form 1040) instead
ducting the cost of business property is called
home if you meet the following requirements.
of Schedule C if you made a profit and
depreciation. Use Form 4562, Depreciation and
had fishing expenses of $2,500 or less. For
Amortization, to report depreciation.
1) Your duties require you to be away from
more information, see Part I of Schedule C – EZ.
Publication 946 contains the rules you need
the general area of your tax home (defined
earlier) substantially longer than an ordi-
to depreciate certain property. The following list
Who is self-employed? You are self-em-
nary day’s work.
highlights items of special interest to fishermen.
ployed if you own an unincorporated business or
practice a trade by yourself. You do not have to
•
2) You need to get sleep or rest to meet the
Fishing boats. You can generally depre-
carry on regular full-time business activities to
demands of your work while away from
ciate a fishing boat used in your fishing
be self-employed. Your trade or business may
home.
trade or business as 7-year property using
consist of part-time work, including work you do
the Modified Accelerated Cost Recovery
in addition to your regular job.
System (MACRS) depreciation.
Limited deduction for meals. You can gen-
If you work on a fishing boat with an operat-
erally deduct only 50% of the costs of the follow-
•
Nets, pots, and traps.
You can gener-
ing crew normally made up of fewer than 10
ing meals.
ally depreciate a net, pot, or trap used in
individuals, you may be considered self-em-
•
your fishing trade or business as 7-year
Meals you provide to either employees or
ployed. For more information, see Which fisher-
property using MACRS depreciation. How-
self-employed individuals who provide ser-
men are considered self-employed? under Form
ever, if based on your own experience,
vices to your fishing trade or business.
1099 – MISC, later.
you determine that any of these items will
•
Your own meals while you are traveling
What is a trade or business? A trade or
not be used for more than one year in your
away from home for business.
business is generally an activity that is your
business, you may be able to deduct the
livelihood or that you do in good faith to make a
cost in the current year.
Exceptions to limit. You can deduct the full
profit. The facts and circumstances of each case
•
Repair or improvement. If a repair or
costs of the following meals.
determine whether or not an activity is a trade or
replacement increases the value of your
business. Regularity of activities and transac-
•
Meals that qualify as a de minimis fringe
property, makes it more useful, or length-
tions and the production of income are important
benefit as discussed in section 2 of Publi-
ens its life, it is an improvement. You must
elements. You do not need to actually make a
cation 15 – B. This generally includes
depreciate the cost of improvements. If the
profit to be in a trade or business as long as you
meals you provide to employees at your
repair or replacement does not increase
have a profit motive. You do need, however, to
place of business if more than half of
the value of your property, make it more
make ongoing efforts to further the interests of
these employees are provided the meals
useful, or lengthen its life, it is a repair.
your business.
for your convenience.
You deduct the cost of repairs as a busi-
Husband and wife partners. You and your
•
ness expense.
Meals whose value you include in an
spouse may operate a fishing business to-
employee’s wages.
gether. If you and your spouse join together in
•
Section 179 deduction. Instead of depreciat-
Meals whose value you include in the in-
the conduct of a business and share in the
ing property, you can choose to deduct a limited
come of a self-employed individual who
profits and losses, you have created a partner-
amount of the cost of certain depreciable prop-
performs services for your business. You
ship. You and your spouse must report the busi-
erty in the year you place it in service in your
must generally include the value of meals
ness income and expenses on Form 1065, U.S.
business. This deduction is known as the “sec-
you furnish to that individual in his or her
Return of Partnership Income. The income
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