When does a hobby become a business and its expenses can be used as a tax write-off? Mr. Phillip Doris attempted to write off expenses related to his Go-Kart racing. He has been a prison guard at San Quentin since 1982. According to the tax court:
"In 2006 petitioner worked an average of 60 hours per week, earning $178,528.00"
To successfully write off somethig like Go-kart racing, you have to TREAT IT LIKE A BUSINESS.
In this case, Mr. Phillips did not:
- maintain accurate books
- have a separate business account
- advertise
- have a business plan
- did not have a profit motive similar to other go-kart companies
Doing the exact opposite of Mr. Phillips will go a long way to demonstrating that otherwise hobby expenses are legitimate expenses. If you wish to write-off a business expense, you need to have a business.
If you need assistance with tax preparation, planning or resolution, contact us. We can help. Call us at 888-727-8796 or email info@irsmedic.com.
