[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?

[sgarnett]

I wonder how one would classify and depreciate an uninsurable asset, like a race car?

"Sponsorship" is outside my experience and expertise from both sides. Once upon a time I did some consulting work, but there was no hobby overlap and I wasn't into racing at the time. So, let's ignore sponsorship for the moment.

If you buy a PC for a home business and use it 30% of the time for business and 70% of the time for personal use, then only 30% of it is deductible. If you build a race car for business use and actually use it for paid instructing 30% of the time and personal use 70% of the time, then 30% of it is deductible.

Advertising and the need for practice do muddy the water, but if I understand correctly you will not actually be instructing in the car or otherwise using to directly produce income so it may not be 100% deductible.

I'm not sure if you need to consult with a CPA or a lawyer that does small business work (or both, of course). In my case, I got much better advice from the lawyer.