here is the rub: you can do that, but unless you file as a business, you
cant deduct losses greater than income. to be a business you have to do a
few things, but the "intent to make a profit" is the key one. most tax
courts wont look at what you are proposing as a business, but as a hobby
expense, and thus limit your deductions to the amount of income. you also
need to be able to justify your expenses... if you distribute waxing
products, although i think it would be ok to deduct autox expenses as
'advertising expenses', it wont look good if 100% of your tiny $1,000 gross
income goes to an activity that i usually considered a hobby. 10-30% would
be a more normal advertising budget and that you can argue. also remember,
intent is important, because intent to cheat is fraud and a criminal offense
(read jail) while if you can argue reasonably then it civil (read $$).
i am not a lawyer so thats just my 2 cents. ive filed at least one schedule
C (small business) for the last 15 years.
-james
----- Original Message -----
From: <E911me@aol.com>
To: <ba-autox@autox.team.net>
Sent: Thursday, January 30, 2003 4:01 PM
Subject: Using a small business to help with autoxing/racing events?
> Hi all,
>
> As I was thinking about racing events and associated expenses, it occured
to
> me that some people must use a small business and its subsequent
> tax/government benefits to stretch their racing passion funding? For
> instance like selling something on the side, using this entity to be able
to
> write off their reciepts and usage of the car? I mean my thought would be
> that you'd pay for it anyway, but by doing this, it makes the net expense
to
> you much less? See where I'm going with this?
>
> I was wondering if many do this, and if there are some suggestions on how
to
> structure something like this? I can see some major car expenses coming
my
> way, but to alleviate the burden if I don't quit my day job as a slacker,
> heh, then maybe I can run some side business as a distributer of some one
off
> part or service (that would sell itself) to make what I would normally
spend
> on the car less come each year end?
>
> I'm thinking aloud right now, but was looking to see if people had any
> suggestions on what has been done successfully, if it can be done, and any
> other advice.
>
> My thoughts were about setting up a small personal businesses that can be
run
> as a smart cover for racing expenses and side money (if not alleviate all,
> make the finance easier). This is a different discussion than having an
> outside sponsor?
>
> Thanks in advance
>
> Salah
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