class racing as a business?

[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]

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?

[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.

[Dan Fahey]

Hey Scott:

It would be a lot easier if you already had a profitable business.
I had a racing business in the 80's and won a good bit of money but more losses which reduced my taxes, a lot !
But the laws killed off a lot of public deductions such as interest on all loans.

Today my company DanSources sponsors my car and use the advertising deduction as key tool.
Since I also Referee Soccer those earnings are reported too.

The IRS does look for people abusing the system.
When caught you can see them whine and cry about it.

The IRS will allow you to deduct against what you won and avoid paying taxes on the earnings.
If you are out for blood they will visit you.

Got audited 3 times 1983, 1984, and 1990, twice in 2002 and 2004.
The last two were very thorough but each were done in a day.
2002 ended up getting a small refund.

If you do it with the intent to stay honest, keep good records there will be few problems even during an audit.

Be Square Play Fair.

Dan