JJmxr

Member
Nov 14, 1999
122
0
Since I'm no accountant I was trying to think of a way to write off riding. A small race team was on idea, but I don't know if that can qualify as a buisness. My other thought is to make a video, and sell it. I wouldn't care how much it sold, I would be happy just to write off my kids parts, and stuff. I don't know if the IRS would be hip to accepting deductions for thousands of dollars of bike stuff though, when the video probley wouldn't sell much.
 

oldguy

Always Broken
Dec 26, 1999
9,411
0
My understanding (Iam not an acct or Tax preparer) is that to write it off you have to show an income from it or expect to show an income in a year or so. Also there are limits to how much you can write off in relation to how much you earn.
Hopefully nikki or gospeed will see this and give us some facts.
 

James

Lifetime Sponsor
LIFETIME SPONSOR
Dec 26, 2001
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I think the rule is that you have to generate a taxable income for three of the last (most recent) 5 years. Also, you have to be clearly operating the business with the intent of making a profit. The rules are more complex that this I am sure.

There is a specific section mentioning that hobbies or hobby businesses are not deductable and this is one area that the IRS is not likely to fall for a thin disguise.

I am guessing the most you would get out of it would be an audit.

Try www.irs.gov

http://www.irs.gov/businesses/small/article/0,,id=99239,00.html

http://www.irs.gov/pub/irs-pdf/p535.pdf
 
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Tony Eeds

Godspeed Tony.
N. Texas SP
Jun 9, 2002
9,535
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James is pretty close. I don't know the exact requirements, but you do have to make a profit or the IRS considers it a hobby.
Guess that means my business is a hobby this year :whiner:
If your as good as most of us, set up a nonprofit company for your riding team. That way you can say you are a joke and all your profit went up in laughter. :)
 

High Lord Gomer

Poked with Sticks
Sep 26, 1999
11,788
35
I asked my accountant about it a few years ago. For my situation at the time, there were only three ways that I could write off any of the riding expenses:

1. If done as a business, I could only write off enough expenses to offset any winnings I had (yeah...right!)

2. If I could show an honest positive value from it (if I was able to get contracts or employees because of it).

3. I could "pay" myself for running my company name on the bike only as much as someone else would pay me to run theirs. I didn't keep accurate enough records, but I had thought about claiming the discount I got from the local shop as a "sponsorship" for running their name. My thinking was that if I spent $1,000 and received a $300 discount from them, that I could then have my business write me a $300 check for running the business name and classify it as advertisement. I didn't actually do it, so I don't know if it would work, but I imagine that you would have to make sure the shop was willing to agree to the fact that the discount they were giving you was considered payment for running their name on your bike(s).
 

ochster

LIFETIME SPONSOR
Mar 11, 2000
689
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James comments are very close to what my CPA sai's. The biggie being you have to show "intent to making a profit". And if challenged by the IRS, thier decision is the one that counts.

To be legal, you also have to be in compliance with all local and state laws, ie; zoning. In my situation, there are alot of them. Things you would not expect, such as storage facilities and quanities of chemicals, fuels, and solvents. Some of these actually require seperate permits and inspections. My local juristication require's all businesses to pay many small taxes, when paying your quartarly sales tax.

The shear time involved with all of the logistics, and accounting, in my case, is a couple day's a month.

My allowable deductions, and or depriciation schedules are based on a percentage of my profits. Where I have seen a "rebate", is when the business loss, or investment, changes my family's combined taxable income at years end. I rely on a CPA, fortunately it's an inlaw I trust. Otherwise it's simply overwhelming.

Obviously, my bike purchases and riding expenses are legitimate deductions. But there getting enough other places, it's not a freeride.
 

Jaybird

Apprentice Goon
LIFETIME SPONSOR
Mar 16, 2001
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Charlestown, IN
You can show a loss for the first three years when operating a business for profit. After that, claim money made and pay the appropriate taxes or plan on an appointment at the federal building with an overweight person who eats lots of onion dip and sardines, and hates most things about other people. :)
 

dirtnuts

Member
Dec 1, 2000
5
0
It's a little easier if you're self employed. You can set up a separate LLC as a promotion company and bill your business a monthly fee for advertising services. Your promotion company can use this money to buy bikes, pay gate fees etc., all of which are legitimate expenses in the running of a for-profit race team.

Show a modest profit every three years, pay a minimal tax, and you'll be all set. Just make sure you have an advertising product to show for the money you are receiving. Have team shirts, jerseys and bike graphics, and use your trailer as a rolling billboard to promote your sponsor (your primary business). Take photo's and keep records. Have fliers printed up and available as handouts at the races. Send press releases to local publications. It's actually a pretty good form of advertising. Racers and motorcyclists tend to support each other, and you may actually make some sales through your advertising effort.

If you work for a small business and have a good relationship with the owner, you may be able to do something similar. Take a reduction in pay and have that money paid (without taxes) to sponsor your racing effort. You will still want to setup the LLC to make it easy to report. Even if it's only $50/week you could save $750 - $1,000 per year in taxes.

:yeehaw: ***WARNING - OBLIGATORY FINANCIAL DISCLOSURE **** :yeehaw:
I am not an accountant. While it may be legal, the IRS won't like it. :scream: You may increase the probability of an audit. Laws vary from state to state and business to business, so consult a tax professional before doing anything.
 
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