nothere

iTrader: (23)

maybe if you opened a business (so and so's race car business), but what kind of business operates at a HUGH loss year after year, Deducts a fortune in parts, claims a paltry income and gives that away to charity.
might work on D. Trump's tax form but not on ours.
file it away in the wishful thinking bin.

EVOlutionary

iTrader: (38)

I think ALOT of small businesses have huge losses for the first 2 years as they are getting started, spending alot on capital and advertising. By the 3rd year your racing company would break even or make a couple thousand $$ net profit. It would make a little money for a couple years until you have to invest in a new race car, then you would have big losses for another year or two, then you would have a profit for a few years. . .

I can see a "business" running like that. Hopefully though, you WILL find a way to make money at it so that after the first couple years you never have to take a loss again. . .

GregGSC

iTrader: (44)

Just start an LLC For your racing. If you have another business to sponsor it you can take double deductions. If not by the end of the year what ever racing expenses you incurred minus any winnings will either net you income or a deduction more than likely a loss will happen… unless your into NASCAR… woohoo go Ricky Bobby! And that will go on your tax return as a loss or income. 1 line item on your personal tax return as you will be the primary share holder.

Total initial cost for an LLC is probably $750 or less depending on if you have an attorney setup the LLC or you do it your self. and then yearly you’d spend the money on another tax return. Which if you use TurboTax could be $100 or if you have an accountant do it a lot more.

If your spending 20k a year on racing. you should have one already. if your spending 5k it might be a toss up. It also means you will become a book keeper. So every receipt will need to be put into accounting software.

Any Parts, insurance, tires, fuel, travel, trailers, out sourced work can all be expensive when racing. Even eaten out when you’re working on the car or at the track

lagcisco

Can my cars payments also be deducted if its used or doing research for business?

I've been taking small steps into developing a custom LCD-backed gauge cluster for my Evo, taking in readings from odb2 and zeitronix egt/boost/afr, plus have audible/visual alarms for dangerous conditions as observed from those readings

so far its all for hobby use but it could be a possible and legitimate business opportunity its just that theres some much research and development that needs to be done

GregGSC

iTrader: (44)

Car payments are tough the interest is deffinatly but you will have to depreciate the car so the actual car is an asset... a lease is a total right off in a business. thats why they are there.

Just because your thinking about something or hobbing with something doesnt mean you can get a tax break. there must be a business in place to take advantage.

trinydex

iTrader: (12)

what is an llc

EVOlutionary

iTrader: (38)

Limited Liability Corporation

value

iTrader: (1)

Operating expenses and property (Your car) fall into different catagories for taxes. Like Greg said you need a business in place first. But the IRS will be looking for sales or profit from your business on your returns. If you just have losses from having fun racing and expenses buying all the great parts you can think of the IRS will question it.