The IRS Let Him Defer Tax on $100,000 for a New Lobster Boat. Social Security Still Counted the Fishing Profit.

A tax strategy aimed at replacing fishing vessels through the federal Maritime Capital Construction Fund (CCF) can defer federal income tax, but it doesn’t eliminate all the related counts. The article explains that even if $100,000 of qualifying fishing income is deposited into the CCF for a new lobster boat, the IRS still expects operating income from the “agreement vessel” to be reported on Schedule C. The CCF deposit can reduce taxable income later down the return, yet it does not reduce adjusted gross income, and it doesn’t erase the fishing profit used to calculate self-employment tax. For those collecting Social Security before full retirement age, the retirement earnings test isn’t reduced by the deposit.