Howdy,
Just wondering what the deal is exactly with privateer racers/amateurs....can you get a business license, create a name/website, put the cost of the bike as a loss and any sponsorships you receive as profits? What are some pros/cons to this? And am I risking getting royally screwed by Uncle you-know-who?? I know my question is simplistic in form, but.....what's the story?
Any links to such a topic would be appreciated...
Thanks!
Check out this thread http://www.racemotorcycles.com/cgi-bin/board/YaBB.pl?board=ccs1;action=display;num=1091034058;start=
All it took was a search. I used "taxes".
Ping me or place a post if the thread doens't answer your questions.
H-man
I have a an S corp set up for my home based business, I use Racing as a Marketing expense and write all of it off. 100% legit, and the great thing about the Marketing catagory is you can spend all you want on it.
I just short-cut Chuck's process. I have a marketing business...
QuoteI have a an S corp set up for my home based business, I use Racing as a Marketing expense and write all of it off. 100% legit, and the great thing about the Marketing catagory is you can spend all you want on it.
100% legit for a few years anyway. I also run all racing expenses through my company as "marketing/advertising" .. IRS will frown on major losses for more than a few years however and will require you to have all racing exp. as "hobby" rather than actual expenses. Do it till they tell ya to stop, but be prepared after a few years.
QuoteI have a an S corp set up for my home based business, I use Racing as a Marketing expense and write all of it off. 100% legit, and the great thing about the Marketing catagory is you can spend all you want on it.
Also, if audited, the IRS will look at whether it makes sense for the
type of business that you've set up at home to be marketing through a racing medium (kinda like asking why would a women's face cream mfgr advertise in "Guns & Ammo" magazine). They'll also look for any evidence that your home business is behaving as a "true business" would. That is, after a year or so of spending X amount in marketing through your racing, have you tracked any business gained trhrough that medium? Is the X amount that you spent close to the industry norm for marketing activity? Do you have other marketing activities and is the spending there close to that of your racing expense or are they monitored?
These are just a couple of the tests they'll apply to determine whether you have a true business or just funding a hobby.
H.
Nbot,
In case you venture here before reading the responses to your question on the WERA site http://forums.13x.com/showthread.php?s=d71981368b094910a73e412d6a176f2f&threadid=64419, pay particular attention to Kith's post.
The way to do it is not try to make racing a business, it wont work with the IRS. Rather start a business related to racing or motorcycles. Then write off all racing expenses as advertising. I have been in the fiberglass business for 20years now and I can repair anyones fiberglass race bodywork when they crash. So its all related and totally legal. Now I dont make much income from bike repairs at the track but you just have to have the intent in the eyes of the IRS. ;D If i didnt already own a related business i would surely start one like, could be anything really, helment washing? Selling some kind of racing stuff at the track? Anyway thats the way to do, good luck :D.
Hey James,
First, maybe others were writing about making their racing a business, but my comments haven't been. If you are audited, the IRS WILL NOT CARE what your intent is/was. They will look for evidence that you behaved as a business. In your case this may not be a problem. You've been at the fiberglass repair thing for 20 years.
But if someone else starts up something new (even if it's closely related to motorcycles and racing), they'll have to show that their "marketing expense" aired at their personal race/track efforts make business sense.
Is that expense proprotional to what a similar business would spend for marketing? Has that marketing *ever* led to business? If not, then why would any true businessperson continue to spend money on such a thing?
These tests are applied in order to make sure the efforts aren't tax evasion. If the business is a LLC, then the person is particualrly gonna get banged by the IRS. All those "business expenses" on what they may classify as a "hobby" will have lowered his/her taxable income. The IRS will levy past amount due, interest and penalty.
Okay. I'm done. I ain't gonna rain on this party anymore. Just like in many sports feel free to believe, it's all legal until you're caught.
Allright, sounds more complicated than I thought, which is what I was expecting!.....Seems as though I won't be able to write off my SV puchase this month for 2004. And since I will be novice it doesn't look as though racing for money will even be an option, plus I don't own my own business that I can "advertise" for....I guess what I should look into more is having a marketing company, and selling advertising space on my bike as well as others bikes and I suppose in other mediums (webspace, flyers, etc??)....I definitely don't want to end up like Kith.....
JeF4y, do you have any more details on your marketing comp. that might help out?
Don't forget, you need "income," against which you write off your racing "losses." You can't just declare it against your salary.