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Old 01-10-07, 04:51 PM   #1
Cypress
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Attention Racers:

Because of the amount of money I put into racing each year, H&R Block decided it was best to make my hobby into a "business". I saved $400 on my return because of this.

If you have a company do your taxes, ask about it.
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Old 01-10-07, 04:56 PM   #2
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Since it is now a business that makes you a Pro right!
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Old 01-10-07, 04:57 PM   #3
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Yep now he is sponsored.
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Old 01-10-07, 05:09 PM   #4
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Cypress sponsored by the IRS...now I'd like to see THAT team jersey!
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Old 01-10-07, 05:14 PM   #5
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Old 01-10-07, 05:14 PM   #6
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Quote:
Originally Posted by worker4youth
Cypress sponsored by the IRS...now I'd like to see THAT team jersey!

I've seen the jersey. It has guy bent over, his pants around his ankles and a very pained expression on his face while Uncle Sam is behind him with a big fat grin.
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Old 01-10-07, 05:16 PM   #7
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Does this make sense??

http://www.bankrate.com/brm/itax/tips/20010403a.asp



Quote:
Originally Posted by Cypress
Because of the amount of money I put into racing each year, H&R Block decided it was best to make my hobby into a "business". I saved $400 on my return because of this.

If you have a company do your taxes, ask about it.
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Old 01-10-07, 05:24 PM   #8
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I would consider that but I would be a complete laughing stock for starting up the least succesful business ever!
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Old 01-10-07, 05:25 PM   #9
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This is the USA. When it comes to taxes, it's not about being successful.

Smart stuff, Cypress.
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Old 01-10-07, 05:42 PM   #10
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I am with the IRS in Bozeman. Could we schedule a "meeting" Mr. Cypress?

"Everybody has to pay taxes, even businessmen who lie and cheat and steal everyday have to pay taxes"
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Old 01-10-07, 05:42 PM   #11
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I am with the IRS in Bozeman. Could we schedule a "meeting" Mr. Cypress?

"Everybody has to pay taxes, even businessmen who lie and cheat and steal everyday have to pay taxes"
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Old 01-10-07, 06:22 PM   #12
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Did anyone read the link R600 posted?

It makes sense to me...I know I've spent A LOT more than 2% of my gross income on bike racing this year.
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Old 01-10-07, 06:28 PM   #13
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This is even a better explanation:

http://www.nolo.com/article.cfm/Obje...1/159/264/ART/

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Originally Posted by Snuffleupagus
Did anyone read the link R600 posted?

It makes sense to me...I know I've spent A LOT more than 2% of my gross income on bike racing this year.
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Old 01-10-07, 10:22 PM   #14
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Quote:
Originally Posted by howsteepisit
I am with the IRS in Bozeman. Could we schedule a "meeting" Mr. Cypress?

"Everybody has to pay taxes, even businessmen who lie and cheat and steal everyday have to pay taxes"

LOL. It's all legit. My "business" is taking a loss this year.
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Old 01-10-07, 10:27 PM   #15
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Very interesting.
I never considered deducting my cycling costs as losses, I just figured that as long as my costs (about $6,000.00 in 2006) exceeded my winnings (about $700) I would just not report my winnings. But since I could potentially be profitable in a few years , maybe I should start declaring my losses right now. I figure I could save about $1,000 from my taxes. That would buy another nice set of wheels.

Is there an IRS business code for professional cyclist? Or at least professional athlete?
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Old 01-10-07, 10:43 PM   #16
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I was wondering which expenses would be ok to deduct?

Race entry fees?
Travel to/from races & lodging?
Equipment?
Clothing?
Race fuel?
Food consumed on training rides?
Travel to/from training rides?
Coaching?

Anything else?
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Old 01-11-07, 07:08 AM   #17
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With all the money I can save by claiming my losses, I can easily pump those savings into next years loss claim, getting even more back. Taking the following years increased savings and putting it into the year after that.........
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Old 01-11-07, 07:16 AM   #18
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Quote:
Originally Posted by Pizza Man
I was wondering which expenses would be ok to deduct?

Race entry fees?
Travel to/from races & lodging?
Equipment?
Clothing?
Race fuel?
Food consumed on training rides?
Travel to/from training rides?
Coaching?

Anything else?
Brilliant!

I didn't even think of deducting excess food

I can see the audit now "You see, a normally active person of my size would need ~2,500 calories per day. I consume 4-5,000 on long ride days, therefore I needed to write off 3,000 dollars of extra bananas, oatmeal, spaghetti and protein powder"
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Old 01-11-07, 07:21 AM   #19
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Quote:
Originally Posted by R600DuraAce
is there a tax deduction for dialing it up to 400w?
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Old 01-11-07, 07:26 AM   #20
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Quote:
Originally Posted by EventServices
This is the USA. When it comes to taxes, it's not about being successful.

Smart stuff, Cypress.
With taxes, if anything, its the opposite.
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Old 01-11-07, 07:26 AM   #21
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Quote:
Originally Posted by pcates
is there a tax deduction for dialing it up to 400w?
no, but it's $10 for every "OMG Poseur" you drop in an arbitrarily declared race during the fiscal year.
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Old 01-11-07, 07:29 AM   #22
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no, but it's $10 for every "OMG Poseur" you drop in an arbitrarily declared race during the fiscal year.
well someone should be getting a big fat refund!!
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Old 01-11-07, 07:41 AM   #23
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I actually own a business and my business sponsors my team. All cycling related mileage gets written off as well as hotels, food on trips, etc. Sadly, I can't write off any new Orbeas or Powertaps.
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Old 01-11-07, 08:31 AM   #24
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This is why you shouldn't let H&R Block do your taxes. This sort of deduction is a high risk audit flag. And there is a profit test to distinguish Hobbies from businesses. If you don't make a profit in a certain number of years, its a hobby not a business. And if you don't have a reasonable expectation of making a profit, you can't deduct losses.

You'll also need to account for future race winnings. (If you don't next year, the IRS may inquire, based upon last year's return.)

Without any track record of a profitable year, a business plan, business license, evidence that you treat it like a business, etc. this is a very aggressive position, not likely to be sustained if caught on audit.

If you've got a pro license, or you're a Cat 1, and have no other signficant source of income, then it makes sense to truely treat it like a business, account for it as such, and treat it as such on your taxes.

If you're a Cat 3 with $700 in winnings, enough income from a real job to worry about taxes, and show a $3000 loss year after year, it is not going to fly. You're really just banking on not getting audited.

Do you really want to go around knowing that if you ever do get audited you're going to owe a nice little bill for the last 3 years deduction, plus interest, and possible penalities?

You got to ask yourself, is it worth $400 for the risk and aggrivation?

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Old 01-11-07, 08:56 AM   #25
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Without any track record of a profitable year, a business plan, business license, evidence that you treat it like a business, etc. this is a very aggressive position, not likely to be sustained if caught on audit.
pretty much what I was thinking...I'm surprised they gave you that advice. You have to expect to be profitable eventually, I think by your 3rd year. Sounds like you're asking to get audited. If you paid for all bike expenses with a different business account(not your personal), it would look better.
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