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.

[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]

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.

[Tom Goldman]

Originally Posted by SStockDart

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.

National events pay nowhere near what they used to .
In '96 I made $13,000 for a r/u at Virginia , in '08 I made $8,000 for a r/u at Maple Grove.
This years win at Englishtown will only be worth about $11,000.
I am finding that the checks are coming a little slower than in the past ,but I've already recieved more than half of the checks .
I might have made about $1200 more ,if I played the decal game to the fullest, but I didn't, so my loss.
I'm finding it very hard to keep more than 30 legitimate decals on the car.
As far as the original question, keep detailed records of all your expenses for every race. ....You can legitamately deduct reasonable travel ,food , entry, membership and other expenses , such as race fuel incured at the event you recieved winnings from.
You should also be able to deduct interest paid on your motorhome loan since it can be considered a second home.