Racing Moto Amateur Level - Expenses Small Business Write Off

Moto_Geek
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3/18/2019 11:52am Edited Date/Time 1/28/2022 1:47pm
So I'm getting back into racing. I wrote off the graphics and jerseys with my companies name on them which fit under Marketing budget for my small business when I was racing. What about expensing an entire dirtbike that you will use to represent your business logos and brand at the races?

What is everyone with small business getting away with to spend their hard-earned cash and writing off as business expenses?
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Falcon
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3/18/2019 11:57am
The way I understood it when I asked my tax guy, he said you can do that, but you have to claim the selling price as capital gains once you sell the bike. You'll get re-taxed on that amount, so essentially the long-term writeoff is only as large as the total expenditure on the bike. It could actually hurt you in the long run if you buy the bike in a lower-income (less tax) year and then sell it at a decent price in a higher-income (more tax) year.
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RONJ OSE
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3/18/2019 12:45pm
we use ours as marketing/ transport. WE buy it write it off then sell it cash, not taxes
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piscokid
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3/18/2019 1:30pm Edited Date/Time 3/18/2019 1:47pm
Talk to YOUR accountant, but we have done this for years without buying the dirt bike. I write off the things you mentioned as well some other little things. The issue really depends if you get audited and if the auditor is on board with the write offs. The example that was given to me was: If you own an excavating company, it is feasible that you could attract customers at the track. However, if you owned a boat repair business, it is a little more of a hard sell that spending money advertising at a dirt bike track is the best use of funds. YMMV but my accountant said for sure, that it would be very tough to justify a company purchase of a dirt bike. For what it's worth, a business professor told me that the 2 people that you want to make sure drive nicer cars and live in a bigger house than you is your attorney and accountant. Which is true in my case on both parts. I trust my accountant and knock on wood, I haven't been audited in 25 years of self-employment.

The Shop

Fareric
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MI US
3/18/2019 1:55pm
The following is about advertising on a car but I think the same would apply to a dirt bike.

"Advertising display on car.
Putting display material that advertises your business on your car doesn’t change the use of your car from personal use to business use. If you use this car for commuting or other personal uses, you still can’t deduct your expenses for those uses."
https://www.irs.gov/publications/p463#en_US_2018_publink100033921

I don't think you could expense the entire dirt bike. I think you could expense the cost of the graphics.
ktmdan
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3/18/2019 2:21pm
My boss and his family race drag cars competitively and they have a ‘small business’ in the form of a ‘car repair shop’ and they write off everything. He said they just have to make sure they show a profit every couple of years ha.
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Sandusky26
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1/27/2022 3:54am
Im a self employed trim carpenter and I don't know a whole lot about tax write offs. Can I get away with using my MX expenses as write offs?
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1/27/2022 3:58am Edited Date/Time 1/27/2022 3:58am
This was almost 3 years ago, the OP is already in jail because of the IRS.
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Moto_Geek
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1/27/2022 4:15am
This was almost 3 years ago, the OP is already in jail because of the IRS.
OP is busy out enjoying an american dream riding dirt bikes and taking advantage of any small business expense to afford getting my 2 kids through college.

@Sandusky26 The above first 3 responses were good advice. With the IRS, it's obviously better to play on the safe side. for the longevity of your business and piece of mind as computer automation flags a business and then a real human then decides who they audit. My business is doing pretty well, so the write off does not really benefit and when you do write things off, your accountant or you need to track these asset in your books adding additional headache. As recommended above, IMO you would be safe if you want custom jersey pants, trailer graphics, bike custom vinyl graphics with your company name on them, but harder to justify the dirt bike itself.


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1/27/2022 4:20am
This was almost 3 years ago, the OP is already in jail because of the IRS.
Moto_Geek wrote:
OP is busy out enjoying an american dream riding dirt bikes and taking advantage of any small business expense to afford getting my 2 kids through...
OP is busy out enjoying an american dream riding dirt bikes and taking advantage of any small business expense to afford getting my 2 kids through college.

@Sandusky26 The above first 3 responses were good advice. With the IRS, it's obviously better to play on the safe side. for the longevity of your business and piece of mind as computer automation flags a business and then a real human then decides who they audit. My business is doing pretty well, so the write off does not really benefit and when you do write things off, your accountant or you need to track these asset in your books adding additional headache. As recommended above, IMO you would be safe if you want custom jersey pants, trailer graphics, bike custom vinyl graphics with your company name on them, but harder to justify the dirt bike itself.


Hahaha how did I know when I put that you were gonna come back and say something to that nature. I was just joking man..mainly trying to give a hard time about an old thread.

I'd be using all advantages as well.
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Talisker
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1/27/2022 4:29am
The problem with this question is, if you ask 10 different accountants, you will get 10 different answers.
It depends on the accountant. I’ve had ones that do things strictly by the books, and I’ve had ones that know how to play ball.
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Sandusky26
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1/27/2022 4:57am
This was almost 3 years ago, the OP is already in jail because of the IRS.
Moto_Geek wrote:
OP is busy out enjoying an american dream riding dirt bikes and taking advantage of any small business expense to afford getting my 2 kids through...
OP is busy out enjoying an american dream riding dirt bikes and taking advantage of any small business expense to afford getting my 2 kids through college.

@Sandusky26 The above first 3 responses were good advice. With the IRS, it's obviously better to play on the safe side. for the longevity of your business and piece of mind as computer automation flags a business and then a real human then decides who they audit. My business is doing pretty well, so the write off does not really benefit and when you do write things off, your accountant or you need to track these asset in your books adding additional headache. As recommended above, IMO you would be safe if you want custom jersey pants, trailer graphics, bike custom vinyl graphics with your company name on them, but harder to justify the dirt bike itself.


Thanks for the reply. What about parts and maintenance items?
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sandtrack315
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Philadelphia, PA US
1/27/2022 5:04am
Talisker wrote:
The problem with this question is, if you ask 10 different accountants, you will get 10 different answers. It depends on the accountant. I’ve had ones...
The problem with this question is, if you ask 10 different accountants, you will get 10 different answers.
It depends on the accountant. I’ve had ones that do things strictly by the books, and I’ve had ones that know how to play ball.
Yes. Many tax laws leave room for interpretation.

This is a grey area. You could send it and risk and audit and back taxes.
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WDSRCR
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OH US
1/27/2022 6:56am
My wife and I recently bought equipment for electronic scoring at off-road events.

We already have one business that's doing well and I am going to talk to my accountant about at least writing off the depreciation of my bike for the new Scoring business since I will be using the bike to potentially close check points.

We are also looking at potentially being able to deduct the expenses to and from the events she is scoring. I don't think it will ever add up to us going racing for free but if she gets to go to the events and have fun doing the scoring, while I get to go race and it cut's our costs down at the same time, I consider that a win.
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lostboy819
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1/27/2022 7:30am Edited Date/Time 1/27/2022 5:45pm
Here is the bottom line, the IRS is not stupid and if they audit you they will see through the BS your accountant or you tries to to feed them and hang you out to dry, the good news is that most small business and these types of BS expenses are small and they have bigger fish to fry and so its small potatoes and you will probably get away with it as long as within reason but we all know its not really a solid deduction, roll the dice. Cool I have a friend who worked for the IRS and told him that years ago I would cheat on my taxes with deductions etc and asked how long they could go back and then nail me. He asked how much I made and then a few other questions and then laughed and and said "you don't make enough to even worry about it. It was over 40 years ago but it still hurt my feeling that the IRS didn't think I made enough to worry about. lol

He also said that if some people are not really high on the audit list because they are not getting to crazy with the BS deductions that they will ignore it for years until its worth it to them to go and do multi year audits and then really get paid, auditors get commissions or bonus on big audit score so even if you think you are getting away with it several years down the road when its worth collecting then they will nab you. DONT F**K with the Government and especially the IRS they play by their own rules and can change them to suit their own way of doing things. Better yet pay your taxes and trying to write off your racing can get you in a bad way.
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1/27/2022 8:16am
This was almost 3 years ago, the OP is already in jail because of the IRS.
Moto_Geek wrote:
OP is busy out enjoying an american dream riding dirt bikes and taking advantage of any small business expense to afford getting my 2 kids through...
OP is busy out enjoying an american dream riding dirt bikes and taking advantage of any small business expense to afford getting my 2 kids through college.

@Sandusky26 The above first 3 responses were good advice. With the IRS, it's obviously better to play on the safe side. for the longevity of your business and piece of mind as computer automation flags a business and then a real human then decides who they audit. My business is doing pretty well, so the write off does not really benefit and when you do write things off, your accountant or you need to track these asset in your books adding additional headache. As recommended above, IMO you would be safe if you want custom jersey pants, trailer graphics, bike custom vinyl graphics with your company name on them, but harder to justify the dirt bike itself.


Sandusky26 wrote:
Thanks for the reply. What about parts and maintenance items?
You start a leasing co for that. Your leasing co leases every part of the bike and the bike to your buisness. A new buisness adventure could b a safe riding book or a coloring book on racing safely. Or traveling in your state promoting tourism. That’s where you reach out to your congressman. And get a tax exception to run your buisness. Of course you promise him an additional 30 % votes in your county. Hire a model if your chic is a skank and setup a meeting. He invites you both on his yacht. Ok here is what you do . You tell him the amount of money he will give you. If he declines you hang him off the edge of his yacht by the ankles until he agrees. Of course you tell him he will get a 10% kick back
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DYE
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KY US
1/27/2022 8:42am
Alright tax gurus. I started working for the local xc series this summer after I got hurt and plan to in 22 again. I really did buy a enclosed trailer last month because I will be at the races Friday-Sunday instead of showing up sunday morning or sat night and will need to bring more stuff and a place to sleep. Could that be written off as a work expense?
ns503
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NS Toolies CA
1/27/2022 9:12am
DYE wrote:
Alright tax gurus. I started working for the local xc series this summer after I got hurt and plan to in 22 again. I really did...
Alright tax gurus. I started working for the local xc series this summer after I got hurt and plan to in 22 again. I really did buy a enclosed trailer last month because I will be at the races Friday-Sunday instead of showing up sunday morning or sat night and will need to bring more stuff and a place to sleep. Could that be written off as a work expense?
Bottom line with all this stuff, is ask you accountant. Even then there is much uncertainty in those decisions, until they get to a court room - then you will find out for sure. But asking your accountant is likely a better idea than asking on Vital.
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Pit Row

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DYE
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KY US
1/27/2022 9:27am
DYE wrote:
Alright tax gurus. I started working for the local xc series this summer after I got hurt and plan to in 22 again. I really did...
Alright tax gurus. I started working for the local xc series this summer after I got hurt and plan to in 22 again. I really did buy a enclosed trailer last month because I will be at the races Friday-Sunday instead of showing up sunday morning or sat night and will need to bring more stuff and a place to sleep. Could that be written off as a work expense?
ns503 wrote:
Bottom line with all this stuff, is ask you accountant. Even then there is much uncertainty in those decisions, until they get to a court room...
Bottom line with all this stuff, is ask you accountant. Even then there is much uncertainty in those decisions, until they get to a court room - then you will find out for sure. But asking your accountant is likely a better idea than asking on Vital.
I almost edited my response to say obviously I´m going to ask my accountant. But it´s noon on a Thursday, I´m on lunch at work, not doing my taxes lol. Hadn't even given it a thought until I saw this thread figured I´d ask
SPYGUY
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1/27/2022 9:53am
If I put my business name on the side of my ski boat, can my business pay for the entire boat and all of my ski accessories?

Of course not. But many people think it’s different when you do it with motorcycles for some reason.

If you want to try, go ahead. There’s a chance they’ll never catch you.
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JBlain619
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1/27/2022 10:04am Edited Date/Time 1/28/2022 5:42am
This thread seems to pop up every year on here. The best thing you can do is contact a CPA. The advice I have heard from my wife(tax accountant) to friends, track people is if it's for amateur racing, the IRS views that as a "hobby" and expenses are not tax deductible. Especially if you are "sponsoring" yourself or a member of you immediate family. It's risk vs reward because it is a red flag for the IRS. Is it worth it to potentially face audit and have to spend more than what you are deducting to fight the IRS in court?
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1/27/2022 10:13am
Do you have a Moto friend who also has a small business?

How about Your business sponsors him, his business sponsors you! I have a pair of customers who do this.

I am a retailer- you might not be surprised I sell an awful lot of 'Safety goggles, safety helmets & safety boots'. I also do a lot of servicing of whacker plates, generators and mixers..
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moto162
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1/27/2022 10:14am Edited Date/Time 1/27/2022 10:21am
SPYGUY wrote:
If I put my business name on the side of my ski boat, can my business pay for the entire boat and all of my ski...
If I put my business name on the side of my ski boat, can my business pay for the entire boat and all of my ski accessories?

Of course not. But many people think it’s different when you do it with motorcycles for some reason.

If you want to try, go ahead. There’s a chance they’ll never catch you.
Yes I took clients out on boat trips all the time when I was pushing hard for commercial and hospital's business. Had our name on it used it to promote my business. Also used it to promote my business locally as the boat stayed in a local area and brought me work just by sitting outside in that neighborhood. The key is to be able to prove that it did in fact bring in business as intended if it is being written of for marketing.

My accountant before he retired was a former auditor.
Like he said it has to make you money at least once a year to be a write off and can't be more then what it brought in.
SPYGUY
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1/27/2022 10:41am
moto162 wrote:
Yes I took clients out on boat trips all the time when I was pushing hard for commercial and hospital's business. Had our name on it...
Yes I took clients out on boat trips all the time when I was pushing hard for commercial and hospital's business. Had our name on it used it to promote my business. Also used it to promote my business locally as the boat stayed in a local area and brought me work just by sitting outside in that neighborhood. The key is to be able to prove that it did in fact bring in business as intended if it is being written of for marketing.

My accountant before he retired was a former auditor.
Like he said it has to make you money at least once a year to be a write off and can't be more then what it brought in.
So as long as you take potential clients out for a ride around the moto track, writing off a bike is allowed by the IRS?

But in all seriousness, entertainment expenses are no longer deductible and only 50% of meals can be deducted. I find that most people aren’t aware of that change.

Again, feel free to deduct whatever you want and hope it never catches up to you!

A guy I know used to have his business pay for everything racing related. He did it for years but ultimately got audited and had to repay everything plus penalties. Your mileage may vary.
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1/27/2022 10:50am
Write a business plan for racing/marketing.

It is very easy for an auditor to claim the expenses were just for a hobby, however if you have a business plan with a marketing section and you include racing in there it gives you a solid standing and a paper trail to back it up.

Seriously this sounds silly and simple but in todays world documentation wins.
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T-Fish
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1/27/2022 11:03am
If you can’t afford it, just say so.
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APLMAN99
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1/27/2022 11:33am
Sandusky26 wrote:
Im a self employed trim carpenter and I don't know a whole lot about tax write offs. Can I get away with using my MX expenses...
Im a self employed trim carpenter and I don't know a whole lot about tax write offs. Can I get away with using my MX expenses as write offs?
Yes, no worries on even keeping receipts. Just estimate how much you've spent and write it off each year.......

What's the worst that can happen?!?!?!?!?!
crpilot
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Nashotah, WI US
1/27/2022 12:50pm
I've actually been directly involved in setting up sponsorship contracts that are recorded as marketing expenses. The key if you want to write off the expense is to set up a contract that defines the performance obligation, the compensation, and a finite time period for said performance obligation. The payment to an individual can be based on displaying custom graphics, being a brand ambassador (verbally promoting your brand when at races), reimbursing for expenses as incurred (race fees, parts, and travel), etc. Its the exact same as as Redbull paying someone to where there helmet, Mercury Marine paying a fisherman to run a Mercury outboard, or HD paying an A-List Hollywood Actor to ride there bike. Accounting rules do not differentiate between a $10B company or a $100k company.

With that said, your documentation and contract should be tight if you are paying yourself for being a brand ambassador for your business......
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Sandusky26
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1/27/2022 2:28pm
Moto_Geek wrote:
OP is busy out enjoying an american dream riding dirt bikes and taking advantage of any small business expense to afford getting my 2 kids through...
OP is busy out enjoying an american dream riding dirt bikes and taking advantage of any small business expense to afford getting my 2 kids through college.

@Sandusky26 The above first 3 responses were good advice. With the IRS, it's obviously better to play on the safe side. for the longevity of your business and piece of mind as computer automation flags a business and then a real human then decides who they audit. My business is doing pretty well, so the write off does not really benefit and when you do write things off, your accountant or you need to track these asset in your books adding additional headache. As recommended above, IMO you would be safe if you want custom jersey pants, trailer graphics, bike custom vinyl graphics with your company name on them, but harder to justify the dirt bike itself.


Sandusky26 wrote:
Thanks for the reply. What about parts and maintenance items?
You start a leasing co for that. Your leasing co leases every part of the bike and the bike to your buisness. A new buisness adventure...
You start a leasing co for that. Your leasing co leases every part of the bike and the bike to your buisness. A new buisness adventure could b a safe riding book or a coloring book on racing safely. Or traveling in your state promoting tourism. That’s where you reach out to your congressman. And get a tax exception to run your buisness. Of course you promise him an additional 30 % votes in your county. Hire a model if your chic is a skank and setup a meeting. He invites you both on his yacht. Ok here is what you do . You tell him the amount of money he will give you. If he declines you hang him off the edge of his yacht by the ankles until he agrees. Of course you tell him he will get a 10% kick back
She damn sure is a skank.
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