Draglist.com Drag Racing

not your normal tech but when does your hobby (racing) become a busieness tired of pay taxes on winnings and having no deductions. just venting steam. but there has to be a definition out there but no one can tell me what it is not even the irs. if your not a million dollar team its not a business thanks broke dad

I'm not a tax expert, but I did discuss this type of thing when I was first setting up the two corporations I've owned (including the current Bilden Enterprises, Inc., which is the umbrella organization for Draglist and other stuff).

What the IRS is going to look at is whether you have a reasonable expectation of making a profit in any business. So there are a few ways to go with this. High dollar bracket racers may be able to make the case based on the potential returns they can earn. Same with pro racers.

Using your car as an advertising medium and attempting to set it up as a business for that reason may work. I don't know for sure, but I'm guessing that many of the top dollar alcohol cars out there and other sportsman cars that have their owners' business names on the sides are probably writing off some of their expenses as advertising costs.

There are one or two books I've seen over the years about the tax implications of race cars, but I can't point you to one right now.

Good luck with this... bp

I did some lettering on a car in town here 2-3 years ago and I remember him talking about setting his car up as a business. I don't remember how he went about it, but he is just a low dollar part time bracket racer.

after doing some reserch i asume that most people are so woried over a audit that they don't take the deductions. under the federeal tax regulation hobby versus small buisness our braket racing shouild be a small buisness. tax regulation 1.183-2 now my high school education is going to prove me wrong. but there should be some racers out there that have already been thru it that can tell us there exsperiance. thanks gary b

I have spent many hours on this very subject, I unfortunately have spent more hours sniffing kerosene so the mind is a little fuzzy. if you are serious PM me and i will tell you a mans name and number who used to be an IRS Auditor who specialized in fraudulant deductions and you can pay him (as he is now a consultant working on our side) and hear it from his point of veiw. I asked my a full time attorney and CPA as well as this Ex-IRS man , they all tell me the same thing. If you can prove your rocket powrered funny car or Nitro burning luge is a business with the expectation to earn a profit, board meetings with minutes, receipts etc. all the stuff you would expect to see in any legit business, then you are "not for Hobby" the 'hobby clause" states "resonable expetation", which defined means "gray area" p*ss the auditor off and the gray area bends his way, see what i mean. As for audits , the IRS is out numbered and I bet they don't chase nickels, so as a gambling man I bend the gray area my way, "BUT" and I qualify this entire posting with a "BUT" I dont' have cable tv and the federal prision system does.

i have also delt with the IRS 3Times

was it about the race car ? what was said? what was the out come? please expound.
mick