A very small percentage have made money racing. Some think they have but if they showed a wage for their time and the actual cost of everything involved they lost by a lot.

If you go the route of showing your racing as a business you will soon see how much you are really spending. It may depress you so much you quit racing. That is unless you have an overtaxed career and the racing business offsets it to get a decent refund.

I have been selling parts for years. Sometimes on a large scale and sometimes going months without even turning any sales tax money in for lack of sales. Most of that is not the fault of the business I am in but the time it takes to do it. Working a full time job and being on call 24/7, this is where the real money is made, takes a lot of time. So do you take the call or wait for a customer to show up when promised or take the trouble call at work that pays a guaranteed $100. Then the IRS and other taxes takes $50 dollars out of that $100. Well then that race car you have been sporting all over the country trying to solicit business pays off and gets some of that tax money back. It's not intended to happen that way but sometimes that is what it appears to be. If my day job were cut off today at least all the equipment I have purchased and written off will be used to keep the bills paid and the profit will turn in to tax paid to the IRS. This is the area most screw up. They write everything off then they sell out and don't want to pay the tax. Several I know had $30,000 appear from no where and did not show the income. Funny they wrote it all off when they purchased it.

I suggest to be honest about it. And the same as paying tax on those 1099's the track gives out you should be able to write off the expenses to offset the tax on those. Buy a set of valve springs write them off. Sell them to someone later for 25 cents on the dollar show it as a sale. Just like if you get $100 bucks from the track for a round win show it it may help legitimize your cause later.