Racing and taxes

[Jerry Scott[CO]]

If you do this, you will most likely send up a flag for an annual audit by the IRS. Any business involving racing that does not make a profit, and has tax write-offs will find this to be true. If you don't mind the inconvenience and your books are clean, then go for it.

 

[Jeff-00-ACR]

As you probably already know you can do this for 3 years (i think) and if you don't turn a profit then it is determined to be a hobby and you can no longer call it a business. Doesn't matter if it sends up a flag as long as you follow the law. Of course that is as long as you are not doing anything shady.

 

[Ken Diemer]

I have prepared income taxes for several racing entities and have never had one audited. I had a non racing entity audited and the auditor told me that I used every loophole in the code but that is what they were there for. If your racing series has possible prize money, your argument is stronger for being a business. Talk to a good accountant in your area. He/she can help you set this up properly. If you need a name of a good accountant in Minnesota, send me an email. I know someone who is excellent!

 

[JBenko]

I'm sure there is someone out there with tax advice regarding the best way to finance racing expenditures. I am contemplating setting up a new corporation as my "race team". As an owner of a small business I thought I might then purchase advertising exposure from this new Race Team Corp. It would be likely (a certainty) that the only revenue received by Race Team Corp. would be limited sponsorship (mostly from my other company). It is likely that Race Team Corp. will have expenditures exceeding its revenue - ie. it will show a loss at the end of the year.

I am thinking that this would allow for a legitimate deduction from my primary business for advertising, would allow for legitimate deductions for expenditures for the racing effort, and that the loss shown by Race Team Corp. will offset gains from my primary business.

Any thoughts ???