I know this has likely been discussed before and I tried the search feature which turned up nothing. Any of you serious racers take a tax deduction for your racing expenses? I am thinking about doing this for the first time ever and would like some real world input.
Bob, did you win more $ last year than you spent? If you did then you should be able to write off the racing expenses against the winings and be just fine.
My advice on operating it like a business is for the situation where your expenses are greater than your winnings. The IRS allows businesses to lose money. They don't allow a hobby to lose money. They do tax hobby earnings though.
Same thing with a lottery ticket. If you spend $5000 a year on lottery tickets you can't write it off. If you spend $5000 on tickets and win $10,000 then you only need to declare the $5000 net as your earnings.
So the rule is that you can write off expenses against winnings, but you can't write off losses. (unless you are a real business)
