Re: racing as a business
[Re: cyphre666]
#235723
02/25/09 11:17 AM
02/25/09 11:17 AM
|
Joined: Feb 2005
Posts: 2,528 Mansfield, Tx
Jacob Pitt
master
|
master
Joined: Feb 2005
Posts: 2,528
Mansfield, Tx
|
We just started this in '08 for the first time. It helps not get nailed at the end of the year from the 1099's. I agree you should get a good tax guy for it, and keep all your reciepts. A lot of guys around here do it.
2013 NHRA D4 Stock Champ #4 in the World IHRA Stock 2x IHRA Div.4 Stock Champ 14x Track Champ All using a Ultimate Converter Concepts converter. Call Lenny today 704-892-6837
|
|
|
Re: racing as a business
[Re: fowl play]
#235725
02/25/09 03:13 PM
02/25/09 03:13 PM
|
Joined: Oct 2007
Posts: 1,973 SoCal
jake4cars
top fuel
|
top fuel
Joined: Oct 2007
Posts: 1,973
SoCal
|
Quote:
i am looking for info or books about making my racing a business . can anyone point to some books on the subject? i owned my own business before but not racing.also your thoughts about doing this. thanks
I believe Phil Vandeheer may have written something , look on racingjunk or Amazon. Good Luck!
|
|
|
Re: racing as a business
[Re: jake4cars]
#235726
02/25/09 03:42 PM
02/25/09 03:42 PM
|
Anonymous
Unregistered
|
Anonymous
Unregistered
|
Whole lot easier to have a business and use the car as an advertising vehicle.
|
|
|
Re: racing as a business
[Re: B G Racing]
#235727
02/25/09 04:04 PM
02/25/09 04:04 PM
|
Joined: Apr 2007
Posts: 3,746 Riverside, California
Lil Demon
master
|
master
Joined: Apr 2007
Posts: 3,746
Riverside, California
|
Quote:
Buy a cheap computer and the latest version of QuickBooks and have fun.
As for profitability - that may be out the window with this economy. But, I believe if you have a plan and show progress towards it that is a minimum.
|
|
|
Re: racing as a business
[Re: JulieJordan]
#235729
02/25/09 05:24 PM
02/25/09 05:24 PM
|
Joined: Oct 2004
Posts: 3,097 back in Georgia
dthemi
master
|
master
Joined: Oct 2004
Posts: 3,097
back in Georgia
|
Quote:
your financial status; and whether the activity involves elements of personal pleasure or recreation.
Dare not enjoy your work in our free land, as we include your financial status in our estimation of your intent. I hate vague laws that are seat of the pants, shoot from the hip, legislation designed to take more money from those who earned it.
Thanks for the explanation Julie. I had no idea there was that much wiggle room for the IRS.
|
|
|
Re: racing as a business
[Re: fowl play]
#235730
02/25/09 06:25 PM
02/25/09 06:25 PM
|
Joined: Jan 2003
Posts: 5,445 So Cal
Sinitro
master
|
master
Joined: Jan 2003
Posts: 5,445
So Cal
|
Keep point is that to be considered a business..Racing needs to show a revenue income flow, if the business only shows losses/expenses and no incoming $ the IRS will shred it.. Just my ...
|
|
|
Re: racing as a business
[Re: dOoC]
#235732
02/25/09 08:15 PM
02/25/09 08:15 PM
|
Joined: Aug 2003
Posts: 1,123 Seaford Delaware
JSR1485
super stock
|
super stock
Joined: Aug 2003
Posts: 1,123
Seaford Delaware
|
If you go into racing as business then don't forget Tow rig needs comerical plates-DOT number, log book and up to date medical info along with you have to stop at all DOT stops and weight checks. This is all per US DOT regulations To me it is easier to have it as a hobby
Switched to the dark side...
|
|
|
Re: racing as a business
[Re: dOoC]
#235733
02/25/09 08:28 PM
02/25/09 08:28 PM
|
Joined: Nov 2004
Posts: 4,330 Lynchburg, VA
Leon441
master
|
master
Joined: Nov 2004
Posts: 4,330
Lynchburg, VA
|
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.
Career best 8.02 @ 169 at 3050# and 10" tires small block power.
|
|
|
Re: racing as a business
[Re: Leon441]
#235734
02/26/09 02:36 AM
02/26/09 02:36 AM
|
Joined: May 2004
Posts: 2,864 IN
Irun5snd8th
master
|
master
Joined: May 2004
Posts: 2,864
IN
|
Thanks for the info Julie. That is good info to have. Its actually a heck of a lot less hassle to claim it as a hobby. Fed doesn't punish you for it but try that in Indiana and you get reamed. Made $15,000 in a year had $14,000 in expenses. $1000 profit if I am running as a business. Looked at it and either way I pay taxes on $1000 for Fed. Now Indiana steps in and if I run as a business I pay tax on $1000. If I run it as a hobby I now have $15000 more income that I have to claim and Indiana does not care if I have expenses to offset it. Running it as a hobby is not as easy as just keeping receipts either. Julie could fill us in on that. I have my CPA working on mine right now and I had questions that even he could not answer and is now researching. For instance, claiming income for parts received from sponsors. Sponsor is writing that off, so you need to claim it as income. Only problem is that there is no income; just parts. I am confused just talking about it.
AFCO, Rons Fuel Injection sponsored Dodge Challenger
Mention Street Lethal Motorsports
|
|
|
Re: racing as a business
[Re: 40ford]
#235736
02/26/09 08:25 PM
02/26/09 08:25 PM
|
Joined: Nov 2004
Posts: 4,330 Lynchburg, VA
Leon441
master
|
master
Joined: Nov 2004
Posts: 4,330
Lynchburg, VA
|
Those parts the sponsors give away are hard to put a value on. Their is three different cost figures. Which one are they using. Not that I don't like free stuff but. I would much rather get a price break than a one item hand out.
A tip I can tell you do not let your accountant or CPA depreciate every thing on a schedule. This makes a mountain of paperwork. I had one depreciate everything on a schedule one year. Drill bits, rod bearings, gaskets, you name it. The best thing is those parts that can break like driveline parts depreciate the full value in one year. On a drag car you can depreciate things like chassis work and/or anything that is gonna last a while and cost a lot. You never want to be in a cituation where you are depreciating a part that broke three years ago. CPA's are famous for this as this gaurantees repeat business because you can never figure out everything they did.
Leon
Career best 8.02 @ 169 at 3050# and 10" tires small block power.
|
|
|
Re: racing as a business
[Re: Leon441]
#235737
02/27/09 12:44 AM
02/27/09 12:44 AM
|
Joined: Jan 2004
Posts: 315 Russiaville, IN
mopar376d
enthusiast
|
enthusiast
Joined: Jan 2004
Posts: 315
Russiaville, IN
|
I switched from a hobby to a business about 5 years ago. I keep receipts and reord everything in a spreadsheet as the years go. It is not bad to do if you stay on top of it. I try to claim a profit every three or four years if possible. I know people that have claimed a loss for over 10 years. It might catch up to them but if you keep good books it should not be a issue. In this economy I don't think anyone will question a loss.
Why does divorce cost so much?
Because it is worth it!!!!!
|
|
|
Re: racing as a business
[Re: mopar376d]
#235738
02/27/09 12:52 AM
02/27/09 12:52 AM
|
Joined: Mar 2003
Posts: 2,516 PA
moparacer
master
|
master
Joined: Mar 2003
Posts: 2,516
PA
|
Me thinks the advantages of claiming racing as a business are not worth the pain that you will suffer if and when they drag you in for an audit.....
I write off right up the amount of the 1099s I get from the tracks every year and that's it....
67 Barracuda street/bracket car 11.27-119 68 Dart 502 BB 8.70s-152 414 cid SB Dragster 7.65-174
|
|
|
|
|