Keep in mind that all income needs reported, regardless of whether you run your race team as a business or as a hobby.
You can write off racing expenses regardless if you race as a business or a hobby.
With it being a hobby though, you are limited to expenses up to the amount of income the hobby produces. (ie you can't show that it loses money)...and IF you choose to create a business, you need to show that your level of racing can support your lifestyle and be able to be profitable at some point (generally accepted 3 years.)
If you have your own business, don't expect to be the main sponsor of your race team (on paper at least.) That's a big red flag. Kinda moving money from the left pocket to the right, won't fly with the IRS. Not to say that you can't support your own team, but you also need to show other forms of promotional and advertising expense.
Then there's the snafu of transporting your race team to the track in anything over 10,000 gvwr.
I always thought this was funny, since the DOT considers ALL racing for money to be "professional."
Some individual states are much more critical on this than others. Just be aware that it is a very real problem.
Another example of way too big bureaucratic government.
Disclaimer:
I am NOT a tax expert and am only providing arm-chair advice I have learned over the many years I have been involved in racing (both professionally and as a hobby.) Please consult your personal tax attorney/adviser.
-----
Thanks and God bless,
Brian Carlson
Carlson Racing Engines
Vector Cut
z
www.CarlsonMotorsports.com
Carlson Motorsports on
Facebook
31 years of service to the karting industry
Linden, IN
765-339-4407
bcarlson@CarlsonMotorsports.com