I have done it as a hobby racer and as said before, consult a GOOD CPA. There are many things you can do and there are some things that will send up an instant red flag. The biggest thing I had to do was show a profit and pay tax on it 1 out of 5 years. Keeping excellent records is incredibly important. The biggest pitfall guys run into is trying to write off big expenses and never showing any income at all.

I was doing this before the current regime started screwing with the tax laws. A GOOD CPA will be your friend.