I can be rather slow on the uptake sometimes...OK, maybe most of the time, but a light bulb finally went off for me yesterday.

While in the online "chat bleachers" of yesterday's Fall Fling, the conversation turned to how folks managed to pay for these expensive entry fees, etc. Somebody said, "Well, I'd rather spend it on racing than pay it in taxes." The bulb didn't light, right away, because I responded that the only thing my racing and taxes have in common is that when I get one of those MISC 1099 forms it just means I am going to be paying more taxes. But I finally got it when he said that many, if not the majority of these participants owned a small businesses. Ah ha! Now, I believe this is 100% legit on the part of a small business owner to write off their race expenses, especially if they use their own car as an advertising billboard. But man, of course it makes a lot more sense now. That is a boatload of expenditures that can be legitimately written off, and make the whole deal much more affordable. I know some folks actually use the racing itself as the business, but I'd be scared to go there. If it is part of another business, you could probably even write off the cost of the tax attorney who figures it all out for you.

I apologize to those of you who are saying, "Of course, you nimrod", but I never really thought about it much before. Take care. Tom Worthington

yea I use to write off every penny of racing because we used it to advertise our business. Hey I had 1.5 hours total air time for our car in 1994 at a very cheap 125,000 or so.Now where else could I get that kind of exposure for that little amount?

Problem we found is business can only loose money for 4 years and has to show profit 5th year,you know like the 240 yo government that loose's trillions.LOL
Good them filing for another business name is no big deal.

people take it to all sorts of extremes

we write off trailers, trucks, golf carts and those types of things from our small business.

We do not write off engines or race cars.

Many write off entry fees

quote:

Originally posted by wideopen231:
yea I use to write off every penny of racing because we used it to advertise our business. Hey I had 1.5 hours total air time for our car in 1994 at a very cheap 125,000 or so.Now where else could I get that kind of exposure for that little amount?

Problem we found is business can only loose money for 4 years and has to show profit 5th year,you know like the 240 yo government that loose's trillions.LOL
Good them filing for another business name is no big deal.

Your business was losing more than it made, even at $125K in loses? If that were the case, couldn't you just not write off everything , so that you still showed an annual profit? Did you file your own, or hire a pro? Take care. Tom Worthington

No business was making little more than that at the time. Had accountant that did our taxes at the time. Was smart guy spent half his time in Washington learning new laws passed to help politicians and using those for us.

Really?

quote:

Originally posted by ferndaleflyer:
Really?

Really what, Fern? Really I hadn't figured it out before now? If so, yeah, I hadn't. Take care. Tom Worthington

id rather pay a fair amount and or the correct amount of tax than walk any type of fine line with the irs or state department of finance.

all around me I am watching racers and businesses get audited by pushing the envelope with racing related write offs.

I wouldn't get greedy.because if you really owe 10k the government or state will always say you owe 50k.they are absolutely ruthless,in my opinion its an animal I wouldn't mess with

Justy use the same laws as politicians and you are not walking line. If you are legitimately advertising a company its 100% legal. Now is it smart business decision? No law against stupid decision. If so 95% of public would be in trouble.

Just have records in order and know or have someone who knows the tax laws. Its like pay a ticket off and pay insurance for 3 years or pay a lawyer. Lawyer and good tax guy are cheaper.

It depends on your business on what you can and can't write off. I own an auto repair shop, so when I need engine or transmission parts, tires, etc. It is really easy to write off. Also I can write off my truck and trailer. As these will be used to "transport customer vehicles". If you own an ice cream shop, maybe you can write off your truck. Most guys run into trouble when it comes to their winnings. If you get paid by check, you have to report it. Don't take a chance. Paid in cash, well not so much.

Even if you "write it off" it doesn't save you 100% of the write-off. If you're in a 30% marginal tax bracket for example, a $100 expense taken to write-off saves you $30 in taxes.

I see this "oh they just write it off" stuff all the time, makes me wonder how many people have no earthly idea how accounting and taxes work.

quote:

Originally posted by jenavet:
id rather pay a fair amount and or the correct amount of tax than walk any type of fine line with the irs or state department of finance.

all around me I am watching racers and businesses get audited by pushing the envelope with racing related write offs.

I wouldn't get greedy.because if you really owe 10k the government or state will always say you owe 50k.they are absolutely ruthless,in my opinion its an animal I wouldn't mess with

Seen "TOO" many. where they had a full blown audit and it got "Ugly" quick.The IRS basically considers it as a hobby unless you can prove other wise. In one case in particular, they did his business and his personal. Lets just say, it didn't end well for him. The IRS comeith and the IRS Takeith. Mixing business and hobbies are a bad mix.

A good accountant is worth their weight in gold.

quote:

Originally posted by Woody B:
A good accountant is worth their weight in gold.

allegedly...

quote:

Originally posted by SlyFox:
Even if you "write it off" it doesn't save you 100% of the write-off. If you're in a 30% marginal tax bracket for example, a $100 expense taken to write-off saves you $30 in taxes.

I see this "oh they just write it off" stuff all the time, makes me wonder how many people have no earthly idea how accounting and taxes work.

Yes only 30% tax but I get to keep what is bought with it also. WOuld be buying it anyway,so why not use the system as it is to my advantage when I can.
AS Thread title say "I would spend it racing than pay it in taxes".

quote:

Originally posted by Boucher Jr:

quote:

Originally posted by Woody B:
A good accountant is worth their weight in gold.

allegedly...

Maybe need to install honest in front of good. Well honest on your side anyway.

quote:

Originally posted by TD3550:

quote:

Originally posted by jenavet:
id rather pay a fair amount and or the correct amount of tax than walk any type of fine line with the irs or state department of finance.

all around me I am watching racers and businesses get audited by pushing the envelope with racing related write offs.

I wouldn't get greedy.because if you really owe 10k the government or state will always say you owe 50k.they are absolutely ruthless,in my opinion its an animal I wouldn't mess with

Seen "TOO" many. where they had a full blown audit and it got "Ugly" quick.The IRS basically considers it as a hobby unless you can prove other wise. In one case in particular, they did his business and his personal. Lets just say, it didn't end well for him. The IRS cometh and the IRS Takeith. Mixing business and hobbies are a bad mix.

If it earns money its a business even if it spends more than it makes. A separate business like a motor sports promotion being paid by the other for advertisement,for instance. Only for 4 years as stated earlier or that's how it was when we ran funny car.Stuff changes and 20 yo rule my not apply anymore.

"They're writing it off Jerry!"
LOL

if you are " writing it off " as advertising expense of your own business / inc. and paying yourself personally with it then it becomes income on the personal side ....

quote:

Originally posted by TD3550:

quote:

Originally posted by jenavet:
id rather pay a fair amount and or the correct amount of tax than walk any type of fine line with the irs or state department of finance.

all around me I am watching racers and businesses get audited by pushing the envelope with racing related write offs.

I wouldn't get greedy.because if you really owe 10k the government or state will always say you owe 50k.they are absolutely ruthless,in my opinion its an animal I wouldn't mess with

Seen "TOO" many. where they had a full blown audit and it got "Ugly" quick.The IRS basically considers it as a hobby unless you can prove other wise. In one case in particular, they did his business and his personal. Lets just say, it didn't end well for him. The IRS comeith and the IRS Takeith. Mixing business and hobbies are a bad mix.

Exactly... Went through three audits in the 70-early 80's. Schedule C. Was fine for first two and on the last on where we destroyed the car, wanted to write it off as depreciation... unlike tools they said no. we consider this a hobby just like Horse Racing. They went after them too... We only had a loss the last year still said no... so we bailed!