[mitchntx]

OK ... I think I have all the elements in place to call my racing a business.

I have been reluctant in the past because in CMC there is no prize money and therefore no attempt at income.

But now that I have landed this Texas Driving Experience driver/instructor gig, there is my avenue for income.

It is my undersanding that all expenditures that I incur to help me in my driver/instructor role can be deducted.

All my safety gear is obvious ... suit, helmet, gloves, underwear, shoes ...

But what about the CMC car itself? Could I not contend that without the car, I would have never gotten the job? And to increase or maintain my skill level, I must continue my education as a driver ... enroll in CMC hands on "seminars" ... al of which is deductible ...

Right now, I am being paid via a 1099 and as an individual. Should I set up a sole proprietership and have TDE pay the SP? Could I, as an individual, support that SP from my regular income and get a tax break that way?

What about my shop where I build and maintain the car(s) ... how would that figure into the equation?

[marka]

Howdy,

Someone else can probably confirm or deny, but I think the IRS now lets you deduct expenses you incurred to earn the income that got reported on a 1099 or whatever.

Didn't use to be that way... In '94 racing motorcycles, I ended up filing as a business because I won around $2k (I think... been a long time) in contingency and would otherwise have had to claim that $2k as income, despite having spent $5k to earn it.

In '97, I earned about $1k in prize money, but spent $10k to earn it. In that case my accountant didn't think I met the definition of a business, so I got to pay taxes on $1k extra income that cost me $10k to get. I _was not_ happy about it, but couldn't determine any clearly legal way to not do it.

I think now you can deduct hobby expenses up to the level of income from the hobby. But that only helps those that itemize.

Anyway, the basic deal for me is "go talk to an accountant". I don't think you need to do anything special to show it as income/loss from a business unless you want to insulate yourself from lawsuits or something like that.

Also... I've heard that various race teams have been hassled by the law regarding logbooks and driving time limits when towing... If you're filing as a business, that technically would apply to you as well.

Mark