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Photo of the Day

July 30 - The Med

Today's Photo of the Day is of Noel G.'s Outremer 43 anchored a couple evenings ago at Rapallo's Castello near Portofino on Italy's Ligurian Sea. Guadinat, whose name we apologize for often misspelling, reports the small castle "was built in 1550 to defend against the Turkish and North African pirates." Cruising the Med - it's something all sailors should get an opportunity to do.

Photo Courtesy Noel G.

New California Budget and its Effect on Sales/Use Tax on Boat Purchases

July 30 - Sacramento

As we understand it, Governor Arnold will sign a new state budget tomorrow, one that will, as of October 2, change the rules on 'offshore deliveries' that, in the past, have been used to exempt individuals from having to pay California sales or use tax on the purchases of boats. Given a very quick reading of the pertinent section of the new budget, Thomas Alston of Aero/Marine Tax Professionals in Sacramento flash-analyzed it this way: If you are a California resident, or if your property (boat) becomes subject to California personal property tax during the first 12 months of ownership, or if not a California resident, but if your boat is in California more than half the time, you are required to pay either sales tax or use tax.

In the past, if you kept your boat out of the state for the first 90 days after purchase, or if you kept it out of the state for 51% of the first six months, and met several other conditions, the purchase was exempt from sales and use tax. Who is this new legislation going to affect and how? We're not tax experts, but our guess is that it's going to have a much greater effect on Southern California boat buyers, because it was so much less expensive for somebody in Marina del Rey, Newport, or San Diego, to run a boat down to Ensenada and leave it for 90 days than for somebody from Northern California. The boat price at which it even began to make sense for a Southern Californian was probably as low as $50,000, but for a Northern Californian it didn't make sense up to $150,000 and maybe even more. And even at those numbers it wasn't worth the pain for a lot of people.

Will there still be ways of getting around the sales/use tax? It looks like there will be for the really rich - what else is new? - and folks who are really taking off cruising for at least a year and who will ultimately be selling their boat outside of California. For about $4,000, moderately and really rich folks can form an anonymous offshore corporation in places like the Cayman Islands, British Virgins, Niue, the Seychelles, St. Vincent and the Grenadines, and a host of other places, and have that corporation buy the boat. Then for $12 a year, this foreign-flagged boat can buy a U.S. cruising permit and be in the U.S. The problem would be if the boat stayed in California for more than six months a year. For lots of rich folks, this isn't a problem, as in any event they would already use their boats in Mexico or the Pacific Northwest for more than six months a year. For others, the '90-Day Yacht Club' in Ensenada may become the 'six month parking lot' in the winter for California boats.

The way we read the new budget, it would also be possible for regular folks who are about to take off on a multi-year cruise and plan to ultimately sell their boat outside of the state of California, to avoid sales and use tax. They would need to establish an out-of-state residence or perhaps a Nevada corporation - neither of which is hard to do or expensive - to buy the boat and then take delivery out of the state.

As we said in the beginning, the budget in which these changes occur hasn't even been signed yet, and this is a flash-analysis. It's a very complicated area of law, so if it might affect you, we recommend that you consult a tax specialist, as one small goof and you can be subject to back taxes, penalties, and all sorts of other bad news. For example, if anyone did an 'offshore delivery' within the last nine years, and did not file a California tax return on that specific transaction and has not yet gotten a letter of approval of that tax exempt status from the State Board of Equalization on that purchase, they may still be liable for all those taxes plus penalties and interest.

If you're looking for an expert on this entire topic, as well as for taxes on planes, you might try Thomas Alston of Aero/Marine Tax Professionals in Sacramento. We're not necessarily recommending him, but believe he's a better place to start than looking up 'Legal Help' in the Yellow Pages.

Our parting advice is this: Financial experts say that while it always makes sense to pay as little tax as you can, one should never make a purchase or investment decision based on the tax consequences alone. More on this subject later.

West Marine Pacific Cup

Early July - The Pacific Ocean

"This was a cruise compared to previous races, by far the easiest and most pleasant one yet," claimed Bodacious skipper John Clauser, sailing in his unprecedented tenth West Marine Pacific Cup. "It wasn't at all like a normal Pac Cup - it didn't start with two or three days of cold, wet, hard reaching; there was no dead-down running; and even the squalls were few and far between." Pick up a copy of the August issue to read all about the 13th run of this great race.

The Seattle-based TP-52 Braveheart won the Big Boat class.

On board Martin Brauns' SC 52 Winnetou, the overall winner.
Photo courtesy of Mike Priest

Four guys named Jim, from left: Gregory (Morpheus), Quanci (Kaimiloa), Antrim (handicapper), and Corenman (race official).

Dolls With Ballz: Sylvia (left) and Synthia, the doublehanded winners with Eyrie.

On board the Schumacher 50 Morpheus, second overall.

The Morgan 38 Ghost slogs out the Gate, en route to winning the Little Boat class.

All photos Latitude/Rob except where otherwise noted.

On board the Andrews 80 Magnitude 80, which, like MC-4,
also broke the course record.
Photo courtesy Mike Nash

Japanese Singlehander Pulled from Liferaft

July 30 - Offshore

Wednesday wasn't a good day for Hideo Dan, a 49-year-old Japanese sailor who earlier this summer had sailed from Osaka to San Francisco aboard his 35-ft Fumiyuka V. Having started on a return trip to Osaka last Saturday, he'd gotten about 100 miles offshore when he discovered a leak around his rudder shaft. Initially he thought he'd been able to repair it, but then the leak got worse, causing him to turn back.

At 7 a.m. on Wednesday, Dan set off his EPIRB and issued a Mayday. A Coast Guard helicopter arrived on the scene, dropped a swimmer, Chief Petty Officer Jeff Danner, to check out the condition of Fumiyuka. Danner said the boat looked stable and believed it would be able to last three hours until the Coast Guard cutter Tern arrived. By this time the chopper was out of fuel and had to return to SFO, so the Coast Guard had a C-130 circle overhead. When the helicopter returned to the scene at 11 a.m., the situation was so bad that Dan had put on his survival suit and inflated his liferaft. Once again Danner jumped into the ocean, at which point Dan got into his raft. The swimmer helped Dan into the chopper's basket and then the chopper itself for the trip back to San Francisco. The boat sank that afternoon. When it comes to saving lives, nobody does it better than the U.S. Coast Guard.

Ha-Ha Paid Entries Now over the 70 Mark

July 30 - Tiburon

With six weeks to go before the sign-up deadline, over 70 boats have paid in full for late October's Baja Ha-Ha Rally from San Diego to Cabo San Lucas with stops at Turtle Bay and Bahia Santa Maria.

The Wanderer, who will be the Grand Poobah again, is delighted to note that two of the boats are Bounty IIs: Richard and Lisa Cameron's Nala Setia from Oregon and John Hardisty's Rod Lee from Pt. Richmond. As some of you may know, these Sausalito-built 41-footers were the first large fiberglass sailboats ever made. There's even a Bounty building named after them near the Bay Model in Sausalito. It was also aboard a Bounty II that Latitude was founded 27 years ago.
Among the rest of the fleet, only one boat is less than 32 feet, and only three are over 50 fleet. The most famous nautical name entered to date? John Alden of the King Harbor-based Pacific Seacraft 37 Solstice.

Can't make the Ha-Ha because you'll be in Asia for the October 26 start? Then try to hook a ride on the Hong Kong to Viet Nam race. That should really be interesting!

Oversight from Around the World

July 30 - Planet Earth

Not long ago we ran a photo of a helicopter landing on the back of the new 178-ft sloop Tiara built by Alloy Yachts of New Zealand. Yachting World had a more in-depth article on the boat that included two facts we found interesting.
The first is that during construction, owner Jonathan Leitersdorf was able to keep a close eye on the work - thanks to the presence of four cameras focused on the boat 24 hours a day. As a result, no matter if he was in his residence in New York, Geneva, or St. Barth, he could make sure that nobody at Alloy was sluffing off during the 430,000 man-hours they supposedly put in on the boat.

The second interesting fact is that in order to have the tallest possible mast fit under the Bridge of the Americas in Panama, a 205-foot Southern Spars carbon rig was built with masthead gear that can be flopped down! Money may not buy happiness, but it can eliminate some problems.

Tiara undergoing sea trials

Ready for launch beside Alloy Yachts factory in NZ

The luxurious aft cockpit set for dinner

All photos courtesy www.alloyyachts.co.nz

In Memorium

July 30 - Richmond

We told you about the very sad death of our friend Mikey Murison in the July 19 'Lectronic Latitude. We received the following notice from Lesa Kinney:

A memorial service will be held at the Richmond Yacht Club on August 22 at 12:00 noon for Mikey Murison who succumbed to his long battle with cancer on July 17. Please bring a dish to share as we join together to reflect back on what an incredible sailor and friend Mikey has been to all of us.

Donations can be made to COMF Mikey Murison Fund, College of Marin Foundation, PO Box 446, Kentfield, CA 94801.

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