Racing = Tax write-off?

[Lemming]

Is there a way to write-off my racing expenses (non-pro)? I thought about setting up a consulting business where the consulting would take place at the race track. That should allow me to write-off the truck, trailer, and travel expenses. Of course the business would lose money, but hey, isn't that corporate America:scream:

Any other ways to write it off?

 

[WoodsRider]

Lemming - I've heard of people writing off the cost of a motorhome as a second home or using their business to sponsor themselves to race and writing off the cost of travel and entry fees. Unfortunately if I were to try something like that I'd be the one getting busted for tax fraud.

I'll leave cheating Uncle Sam up to former Enron executives.

 

[Jeff Gilbert]

There is a fine line between a business and a hobby. A business has to show a profit eventually. When using my band if I show a loss for 3 years in a row it becomes a hobby, which falls into a different category.
The problem with racing in my case is I never make any money, the trophies don't buy much.:ugg:

 

[Offroadr]

Originally posted by WoodsRider
Lemming - I've heard of people writing off the cost of a motorhome as a second home

:D

 

[oldguy]

Actually you can even write off a popup as a second home if 1) it has cooking facilities 2) a toilet (portapotties count) and 3) a water holding tank.

Writing racing off is another matter as Jeff said within 3 years you need to show a profit or you'll be talking to your own freindly personal IRS agent:moon: .

 

[Lemming]

Well, how about writing it off for two years then dissolving the company due inadequate income? :confused:

 

[MXFastGuy]

If you want to write-off your racing expenses, you've got two options:

1. Make your racing part of the marketing program of an established, legitimate business. Your truck, trailer, bike are all advertising media. This business will have to be your own, unless you've got a REALLY cool boss who will work something out with your employer.

2. Start a racing-oriented business (i.e. consulting). The problem here is that it will be difficult to show a profit. It can be done, however, with the help of a good CPA. The rules for showing a profit are actually as follows: For the seven years preceeding your tax audit, if you showed a profit for at least two years, the IRS CANNOT argue the legitimacy of your biz. You've won. If, however, you don't show a profit for at least two years in this period, the IRS can call into question whether your "business" is a business or a hobby. It doesn't automatically mean you've lost, but you've got to show a LOT of proof that you're trying to show a profit and it's a real business.

And, if you never get audited, it doesn't matter. About .5% of all 1040's get audited each year. :mad: