1. Would I face the "gifting" problem with a partnership/syndicate? That is, would I still be putting the boat into that entity and partners would then have to buy in and if they didn't or couldn't pay fair market value, I would be gifting them part of the boat? Or, can a boat partnership/syndicate be formed without putting the boat into it?
A: A transfer of property with no payment of fair value in return is a gift. However, for tax purposes, if you receive anything in return for your gift, then that transforms the transaction into taxable income for both the transferror and transferee. Examples:
1. You set up an LLC and you fund it with the title to the vessel. Now, the LLC has an asset value of $1,000,000, which is the fair market value of the vessel. There's no gift, because tax law permits you to transfer assets to fund a business entity. You give your best friend a 20% interest in the LLC. That's a gift, because you expect nothing in return for the 20% interest.
2. Same facts as above, but your friend agrees to pay you $1,250 per month for 360 months at 5% interest. Your friend has purchased his/her shares, and you have received $232,852.02 -- $32,852.02 of which is taxable income (which can be reported as installment income as received, or reported entirely in the first year of the transaction).
Concerning the gift scenario, this doesn't mean you will be taxed on the gift, because everyone has a $5,250,000 lifetime gift tax exemption. But, if your vessel is very costly, then that will eat into your exemption, and reduce your estate tax exemption for your heirs upon your passing. If you don't think you will ever amass more than $5 mill in assets during your lifetime, then you have nothing to worry about. Otherwise, once you pass the exemption limit, you will owe 35% tax on every dollar transferred.
2. Do both partnerships and syndicates (because they are a partnership) face the problem of the general partner being subject to such extreme liability? And, is there always a de facto general partner, i.e., me because I own the vessel?
A: A "syndicate" is not a true legal form. You may as well just say "partnership. Everyone is liable in a general partnership. If you own the vessel, then your partnership doesn't include the vessel. The partnership is only based upon the use of the vessel, but to the extent of that use, it may represent taxable income to both you and the partners.
3. Re LLC/Corporation, if I have a mortgage on the boat would the bank have to agree before I could put the boat into the LLC/Corp?
A: Yes. The bank won't allow its interest to take second position to the LLC/Corp, even if it agrees to the transfer -- and the bank could state that if you make the transfer, then it will exercise its "due on sale clause" in the promissory note, which means that the loan balance is due immediately.