Racing Expenses as a Tax Deduction?
Dec 23, 2006, 06:18 AM
#1
Racing Expenses as a Tax Deduction?
Hi all,
Just want to hear from some folks who have deducted racing related expenses off your taxes. I know a couple people who have done it, but don't really know their circumstances. Do you have have to have an "official" business to use it as a deduction? I heard that even if you only race as a hobby, if you expect to make a profit off of it within 3 years then it can be used as a deduction.
Anyone care to share your experiences, good or bad? Anyone been audited because of it??
EVOlutionary
Just want to hear from some folks who have deducted racing related expenses off your taxes. I know a couple people who have done it, but don't really know their circumstances. Do you have have to have an "official" business to use it as a deduction? I heard that even if you only race as a hobby, if you expect to make a profit off of it within 3 years then it can be used as a deduction.
Anyone care to share your experiences, good or bad? Anyone been audited because of it??
EVOlutionary
Dec 23, 2006, 08:27 AM
#2
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I have my own business (not related to racing or cars) and was thinkng the same thing. Last week I asked my accountant, and he said only if it was a for profit venture could we do something with deductions (trophies and medals don't count). I thought maybe I could promote my business through racing
and effectively sponsor myself. He assured me if I was audited, the IRS would classify it as a hobby and I would owe.
If anybody has any novel ideas I sure have a lot of receipts
and effectively sponsor myself. He assured me if I was audited, the IRS would classify it as a hobby and I would owe. If anybody has any novel ideas I sure have a lot of receipts
Dec 23, 2006, 08:54 AM
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^Mind if I ask but, what winnings Warrtalon?? You mean your sales?? if it is and you're donating part of your profits to a charity then I'm pretty sure you can get something back from the IRS. I'm going to take some tax courses next year and since my dad is an Accountant and does taxes as well I know I've heard him mention stuff about donating to charity. I could also ask him later today and write with more confidence.
Dec 23, 2006, 12:34 PM
#5
Sales? No, I don't sell anything and make no profits. I'm talking about future winnings in racing. I haven't actually competed before. 2007 will be my first year. I don't expect to actually win any money in 2007 or anything, but if there are winnings in the future, they will go to my charity of choice.
Dec 23, 2006, 02:35 PM
#6
I have my own business (not related to racing or cars) and was thinkng the same thing. Last week I asked my accountant, and he said only if it was a for profit venture could we do something with deductions (trophies and medals don't count). I thought maybe I could promote my business through racing and effectively sponsor myself. He assured me if I was audited, the IRS would classify it as a hobby and I would owe.
If anybody has any novel ideas I sure have a lot of receipts
and effectively sponsor myself. He assured me if I was audited, the IRS would classify it as a hobby and I would owe. If anybody has any novel ideas I sure have a lot of receipts
I think you may need to get a better accountant, one thats familiar with sponsorships
There are many many people in SCCA esp Nationals class that are sponsored by racing and non racing related companies. It is a marketing/advertising expense that of course can be used as a tax deduction, just as any other marketing expense. Id highly suggest you do more reseach on this and see exactly what can be written off etc... You see the Swisher Sweets car at the Runoffs? the one with huge Swisher Stickers all over it? Swisher sponsors that car and BTW the driver is also the owner of the company. TRM classics sponsored GTO (they sell cars but not race cars) the owner of that company is also the driver. Good luck!!Marty
Dec 23, 2006, 03:12 PM
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Thank you for confirming my own thoughts on this matter. I have my own fitness company, and fitness promotion for racers seems like a natural fit to me.
I will pursue this further and try to get myself a great sponsor for next season's NASA TT-me!
I will pursue this further and try to get myself a great sponsor for next season's NASA TT-me!
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Dec 23, 2006, 03:24 PM
#8
As for donating your winnings to a charity, that becomes a wash. The winnings are reported as income, then the charitable donation is reduced from your income. 1 for 1. Also, make sure that you're donating to a 501c3 or a recognized charity. 2 cents worth.
Dec 23, 2006, 03:42 PM
#11
Think of the winnings and contribution to something similar to Las Vegas. You can only deduct your losses for as much as your reported winnings. In other words, a wash. 1099G. I would suggest that if you own a company or partnership, that you BUY a certain size area on a car to be used for your companies advertisement. Such as the hood costs 5,000 to buy for advertisement, maybe the front fender in a 12 inch by 24 inch would be 1000. Only problem with doing your own car, is as soon as you pay your CAR the 1000 dollars for the ad, that 1000 is income to someone. That's why I advertise on a friends car and it's up to him to report it.
Dec 24, 2006, 11:25 AM
#14
9sec9, the part you're missing is the original context of the thread, which was writing off racing expenses. Yes, I see how donating winnings would be a wash, since I have to claim the winnings as expenses the same as I deduct the charitable donation as a deduction. However, the point is trying to come up with a way in which the racing expenses (mods, consumables, maintenance, repairs) are deductable. In this case, I wouldn't care that my donated winnings are a wash, because all my racing expenses would then be deductable, if that were possible/allowed.
Last edited by Warrtalon; Dec 24, 2006 at 11:30 AM.