Doing tax for my son (25) here this weekend. He has an ocean fishing charter business. Florida.
He juuuuuuust started it up in the last month of 2019.
Then 2020: All tourists left in March/April or so. Ghost town, and ghost beaches.
No-one around for months !
I think he will show a loss for 3 consecutive years.
However, he worked superhard and managed to overcome a few major set-backs in those first two, three years.
1-The Covid - biggie.
2-Another biggie: a major boat-breakdown and a crummy, crummy, rip-off mechanic and marina, who took advantage of him being so young, and who kept the boat for more that 3 months, barely working on it, then charged 10k.
I had to chip in and loan my son the money, or he wouldn't even have gotten his boat back from this dubious mechanic / marina who was holding his boat hostage until the crook squeezed an inflated price out of my son.
My son got his boat back (because I bailed him out), only for the boat to break down on the first charter, the next day.
That terrible time for him (very upsetting for him, feeling so deceived, and I too) was followed by the boat being docked, not sea-worthy, and then looked at by several, other mechanics while my son learned a lot, quickly about Volvo motors, and going there all the time to work on the boat, to get it all good again, and he did. He about could be a mechanic himself now...
He received good reviews from charter customers and got some repeat-customers even.
He decided to get a 2nd boat in 2022 (with a loan - not from me) so he would never lose customers again because of having only one boat and it broken down.
Now he always has a backup boat and won't have to disappoint customers.
These three big setbacks are - I think - typically start-up issues.
Now, in the meanwhile, he has a good set of customers and very reasonable income.
But I fear that because of the 3 set-backs above (1 Covid, 2 boat out, 3 second boat purchase in TY22),
the Profit and Loss statement TY 2020, 2021, 2022 might not be good.
For TY22 it might be better, but that's also the year of the second boat (asset) purchase.
For TY23 I know he's operational, and his business seems to be around to stay,
with mucho happy customers.
In short: I think - including the Covid year - he might have 3 loss years ...
Clearly now, he has learned so much, overcame so much, has gained respect and customers and good reviews ... I know he is doing pretty well now.
But what about those years TY20, TY21, TY22 ?
Is there anything in the CARES act or some act or regs about how the Covid year,
should alleviate the Hobby Loss 3-year rule?
That year mucks up the whole situation, that otherwise, would not be an issue.
