class racing as a business?

Ok, I know that we aren't going to make money ... not the point. But we need some business/tax advice. I'm a HS math teacher/coach and my wife is an elementary school principal. We've both been educators for 20 years to give you a rough idea of our income. We race a Pure Stock C5 in IHRA and recently purchased a motorhome. Is there a tax advantage to starting our own business and writing off racing expenses including the RV? Any advice on the topic would be helpful.

Thanks!

Wendy & Scott

[Mark Callanan]

Originally Posted by Tar Heel

Ok, I know that we aren't going to make money ... not the point. But we need some business/tax advice. I'm a HS math teacher/coach and my wife is an elementary school principal. We've both been educators for 20 years to give you a rough idea of our income. We race a Pure Stock C5 in IHRA and recently purchased a motorhome. Is there a tax advantage to starting our own business and writing off racing expenses including the RV? Any advice on the topic would be helpful.

Thanks!

Wendy & Scott

I would talk to your tax person
What you asked of people on here wont matter its you tax people who can advise you
Now that said I assume you will get many people here giving advise....

[SStockDart]

Hey Scott....first of all, scratch your first sentence.....To start a business, your intent is to make money and you invest accordingly. You could have to show that your business could make money.....I don't know what pure stock pays, but in the case of NHRA, if you win a couple of National events, you could generate around $30-$40,000. IMO, that would be reasonable if your depreciation, expenses are something less than that.
In our case, we set up a LLC and raced 15-20 events a year, therefore, reasonable that we were in it as a business and not as a hobby.
Best advise is to talk with your tax person.

[442OLDS]

Originally Posted by SStockDart

...I don't know what pure stock pays, but in the case of NHRA, if you win a couple of National events, you could generate around $30-$40,000.

huh?

Pure Stock runs in Stock in IHRA and yes, with contigency money, the potential is there to make that much money. Good point; thank you! We don't have a tax person as we've always done them on our own since our taxes are very straightforward and simple to do. It sounds like I need to contact someone about starting our own business and then asking them if there will be any tax advantages to doing so. I thought someone may have been in a similar situation with their income and what they spent on racing.

[SStockDart]

Originally Posted by 442OLDS

huh?

Well.......you won a couple.......am I way off? The last time I figured contingency for Super Stock, it would have been around $25,000 per event. That was several years ago and I know it is significantly less now, but figured around $17,500. Please correct me.

[HR9121]

Hey Scott, I asked my CPA about it last year and was advised against it as the IRS has been very critical of these business arraignments of late in her opinion. She told me I just as well start a non-profit with the words Tea Party in it when I asked her again this year. I would contact a tax professional in your area and get an opinion based on your income and plans though.

[SStockDart]

Scott...........thinking about it a little bit more and I believe you would have a really difficult time convincing the IRS that you are running a business......Since both you and your wife have full time jobs, I would not even consider it.
That doesn't mean that you can't go out and have a good time......Have fun drag racing, with your family, It is expensive but probably the best value for "family time"

[FED 387]

look for Julie Jordan her Dad/Grandpa is an original SS/S hemi racer goes way back ot the early 60's-- anyway she is an Accountant might be able to advise you --Regards FED387

[pmrphil]

Hi Scott
You will probably find that IRS will want you to show them the reasonable ability to make a profit - you can usually write off winnings against costs, but they will take a hard look at losses, I've heard that losses over $6,000 trigger automatic reviews, and also 3 or more losses in any 5 year period do the same. Find a good tax guy with automotive experience and ask a pile of questions first. In the meantime, have fun racing - that's the whole idea, isn't it?