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Let's say you own a business, does putting your business logo on the side of your car allow you to deduct your racing expense, i.e. drivers ed, SCCA license upkeep, tyres, maintenance as an advertising medium?
Is anybody doing this? How have you approached it?
cheers,
Bobby
 

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You can do whatever you want - it's the IRS that may not like it, but they have to catch you doing it.

You could "sponsor" yourself I guess, but to what extent I'm not sure.

PS - I am a CPA
 

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I'm no expert, but here's what I've been told: It's a stretch to pull it off

IRS doesn't like to see 'hobbies' deducted

You'd have to incorporate your racing venture, and be prepared to show that it's a business, not a hobby. Simply putting a sticker with your business name on it won't cut it if you are audited

If you own an automotive-related business, I think you'd have a better chance convincing the IRS in case of a problem
 

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I think the answer is no. You can deduct a reasonable amount for advertising. How much would someone else pay you to advertise on the side of the car?

However, you can deduct your hobby if there is a business promotion relationship and you can pass the IRS "hobby" test. It does not matter if it is fun and something you do on the side, but there has to be a reasonable expectation of profit.

I do indeed deduct my racing and cars.
 

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Hobbies have to have income associated with them.

I was assuming above he already had a business and that he could "sponsor" his car.
 

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You are probably right about the legit business. The other question though is if a legit business can deduct ALL of one's racing expenses.

As an example, just putting "Joe's Home Repair" on the side of your car as advertising has a value. But it is enough to write off all your racing expenses? Tough one. It may be hard to show a connection between the business and the advertising.

What if the business was a tire shop? Now there is a direct connection and the point could be made that the racing targets the marketing. Seems more reasonable now to deduct the racing expenses.

Note... I AM NOT A CPA, I do not even play one on TV. I just operate a racing related business. :)
 

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Randy - that's why I said I wasn't sure to what extent he could deduct the expenses.

He can deduct all he wants until he gets audited.
 

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You can't deduct it legally.

So meat, should we all shoplift until we get caught? That seems to be your advice, right? Any your a CPA too! Maybe you should go back and take some ethics courses.

I'm a CPA with a masters in Taxation. You can't deduct this.
 

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I think the answer is it depends. If he brings a client to a driving school and close a big contract, then arguably the event is business related. I will argue that the event is similiar to a business lunch or dinner, is an entertainment event for the purpose of fostering business relationships. I will deduct the event subject to the 50% limitation. I will make sure that he hands out plenty of business cards at the event and "discuss" business.
 

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My accountant strongly suggested that I NOT try this with my wife's business. The most he could endorse was the cost of the decals for the "advertisement" as a direct advertising expense. I'm not in any hurry to get audited, however, so no go.
 

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So meat, should we all shoplift until we get caught? That seems to be your advice, right? Any your a CPA too! Maybe you should go back and take some ethics courses.
That is a stretch to imply that he is advocating anything illegal. A LOT of tax law is gray areas. And in many cases, I have read that it quite correct to take gray area deductions and see if the IRS disagrees with you.

I went through this before with taking out business clients racing, and other things. But IMO, and the opinion of my accountant, was not enough. So I started a motorsports related business. And now it is. My CPA agrees with this. But then I also generate profits, not just expenses.

P.S. Moving thread to Other :)
 

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can you deduct a drivers education as an education expense? I mean i am in the IT field and i can deduct books, and schools as an expense so if i go to driver ed on the side is that an education expense?


-jeremy
 

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Wouldn't the driver's ed have to be related to your field?
 

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..let me add my non-CPA $.02.

If you start the business as a Sole Prop you can lose money 3 out of 5 years without it being considered a hobby by the IRS. If you incorporate then you can lose money every year. Incorporation is much more expensive.

Babak, you will need to start a legitimate auto - preferrably a performance oriented, business. Then I believe you can deduct reasonable amounts of these types of expenses. Not just any type of biz will work.
 

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smura-

I didn't advocate any action - I merely said that you can do whatever you want until you get audited.

Question Mr. Masters degree - Companies like DuPont and Home Depot don't get to deduct the A&P dollars that they spend on NASCAR sponsorships??
 

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Of course, the question no one is asking, but that lies in the back of everyone's mind, is how to deduct the entire cost of your Elise...how to turn every mile of your driving into a potential money-maker (at least, enough so to justify the deduction).

I've given lots of thought to this problem, and have come up with a few far-fetched solutions. Most of them involve having a video camera permanently installed in the car, and configured to automatically record every minute that the car is turned on. Then, the challenge becomes how to take that video footage and market it in a way that could be profitable. At the minimum, you figure you could get three years of deductions with this approach (assuming you realize no profit from the venture).

It's a possibility, but so far, I havn't had the time to develop the video system (it'd have to be totally automatic to ensure 100% recording). If anyone wants to tackle that side of the project, I'd be happy to share my ideas of the commercialization of this idea.
 

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Actually... systems like that exist already.

In my business plan, I am coming out with a cheaper solution for solid state video recording. When I get the Elise, one of my things to do, is to see where I can mount cameras. I have no intent on selling the footage, but I do use the footage in marketing.

As far as how to deduct the car, there are ways.

For more on the cameras and mounts, see me at the LA AutoShow in our booth.
 

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Matt-

A friend of my mine has a Ford Prope and some one installed a full body kit but before he did that he drill holes all over the car for digiatal video cameras. He set a state of the art video recording system in the car that recorded from every angle and had a monitor he could switch the views of.

Well some companies like it so much that they start to pay for footage of his car. Even though it was a Probe you couldnt tell from most of the shots. So companies would have him film all sorts of stuff from tracks at low levels and to other cars driving next to him.

This was his business after the companies started calling. Now he has like 5 or 6 different cars( i forget which ones) but have the same setup. I think all of the cameras and recording eqiupment his venture costs almost 75k per car.


-jeremy
 

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Aggressive

Intent... The key behind every court case on this issue. Do you have the intent to earn money doing this?

The IRS usually lets you fly on losses for the first two years. On the third year that you don't turn a profit, they can go back and turn everything that you considered a "business" into a hobby and disallow the losses for all three years.

So what constitutes intent: a business plan and a separate bank account for starters--this should be the absolute minimum you do. If you don't at least have these it wont stand a chance... How do you "intend
to make money on this business? This is what you must ask yourself. If you can't come up with an answer, you are doomed.

Also, a recommendation for these situations, forming a partnership is always a wise decision as far as audit risk and intent are concerned.

P.S. I'm a CPA and hold a Master in Science of Taxation.
 

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Hypothetically, what if I get patients through racing? My partner deducts his golf country club membership as he gets many patients through this....
 
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