If I do restoration work on a car or a boat and later sell it, then there is a potentially capital gains tax liability if I sell it for more than I bought it for. I assume I can deduct money I spend on restoring the item, but not my own time.
For example, let's say I buy a boat for $50,000 and replace an engine on the boat, and do other expensive maintenance and upgrades, and then later sell the boat for $90,000.
Would I just need to save all my receipts for work done on the boat, then subtract this amount from the gain? For example, let's say that all the bills and receipts I have for parts and work on the boat come to $25,000. Then I report a net capital gain of $40,000 - $25,000 = $15,000.
If I do work on the boat myself, is there any way for me to charge my time against the capital gain? For example, let's say I incorporate myself as "The Five Bagger Boat Restoration Company" and then charge myself for the time I spend working on the boat. Is that allowable?