Sponsor that contribute $$$?

[toptier]

For racers that have money sponsors. Do you report the money on your taxes? It's considered income right?

[dragos13]

Thats gonna depend on who is paying you and how much. You will definitely need to claim it if the company is going to be filing a 1099 for that money. If they are going to pay you under the table, then what the government doesn't know doesn't hurt right 8)

[phildrummond]

If you do receive funds and the 1099 is filed, be sure to keep track of expenses. If you buy a bike, drive to races, pay entry fees, you can deduct depreciation of the bike, mileage at the IRS rate (unreimbursed travel expense), and entry fees.

If you write off more than you get in sponsorship money or winnings, you can write that loss off as income against your regular job...unless your regular job is a racer.

[T Baggins]

...If you write off more than you get in sponsorship money or winnings, you can write that loss off as income against your regular job...unless your regular job is a racer.

careful with this one, the "hobby law" will pierce that little balloon pretty quickly.

better to set up an "s corp" or something like that and sell "advertising" - but even then that only works for so many years.

Basically, if you consistently write off more than you make - uncle IRS will consider it a hobby, and then you're effed.

[phildrummond]

Good point. My accountant told me I'd have to demonstrate the potential for making money, and I could generally show a loss for 5 years before I had to make a profit. She also suggested incorporating.

Also worth mentioning, taking tax advice from me is about as smart as taking racing advice. Just something to look into as you file.

[T Baggins]

There are a number of racers who have figured out how to do this over the years, and they would be happy to share their experience I'm sure.

In my case, I'm 100% self employed, so ALL of my "business" ventures can offset my income. When I was "regular employed" I was limited in my Schedule C losses - again, can't legitimately write off more than you make in schedule C income. At least not for long.

Thank god everything I do now loses money, so I'm in the clear!

[Wild Cheetah 612]

If you got more than $600 from a sponsor, then the sponsor is required to send you out a 1099. Otherwise, the IRS won't know you made that money.

I run Wild Cheetah Racing as an S Corp.
I can help answer some questions for you, but if you do set up your racing as a business, then I highly recommend talking with a CPA.

[chris nami]

yeah, what Tony said. -C

[toptier]

Thanks for the info. If I have any questions I'll shoot some of you a PM.

[Jim 'smooth' Brewer]

I was limited in my Schedule C losses - again, can't legitimately write off more than you make in schedule C income. At least not for long.
"My father was fond of saying you need three things in life - a good doctor, a forgiving priest, and a clever accountant. The first two, I've never had much use for." - Oskar Schindler

I've never heard of a time limit on schedule C losses.

I would start with "The New Racer's Tax Guide" (http://www.enthusiastbooks.com/si/30234.html) to get some ideas, then find a good accountant who's not in abject fear of audits.

[Jon]

Indeed there are time limits on a business such as racing losing $$. I believe three years but it may be five. Like schnitzel said, get a good accountant who's not afraid to stand behind you and doesn't think racing bikes is a crazy man's (or women's) sport.

[Jim 'smooth' Brewer]

Indeed there are time limits on a business such as racing losing $$. I believe three years but it may be five.
That's not true. If you make a profit 3 out of 5 years, the IRS will *presume* you're operating for a profit. Otherwise you need to meet another set of criteria which are outlined in http://www.irs.gov/publications/p535/index.html

Again, consult a *good* accountant.