irs regulations

[spotfin]

I'm thinking about entering bass tournaments and would like to know if anyone has been writing their tournament expenses, bass boat depreciation, etc. as part of business expenses. Can becoming a tournament fisherman qualify as starting a business? If so, how many tournament do you think I would need to enter? I think the IRS says a business qualifies as a business as long as you can prove an intent to make a profit? For those of you who do write off expenses, has anybody gotten audited and then told being a tournament fisherman is only a hobby vs. a business?

Any help would be greatly appreciated. Thank you.

[Fishin' Dave]

Step one: Talk to a CPA

Basically you have until the 3rd year to show a proffit. If you loose $$ in to the third year, game over. Run it like a business, save your recipts. Good luck, be sure to call a pro!

[MIKE TREMONT]

I just had my taxes done and asked the same question. My tax guy is really good(x-irs). In my circumstance and what it sounded like, it's only considered a hobby unless you do it full time and nothing else.

[Vince Borges]

You may save all your receipts and entry fees and write them off. Also if you remeber you will get a 1099 from tourney orgs so you better have something to counter it.

[Dan McKenzie]

Fishin Dave nailed this one. Do something good for yourself and speak with a CPA, Tax Planner (not preparer like H&R Block) or
an Enrolled Agent. This can be handled as a business endeavor, or
as a hobby. Both have there pro's and con's and ONLY a true tax pro can guide you in the right direction. Too often people listen to others, well meaning though they may be they're often wrong or not completely knowledgable of tax law.

[NaCl]

...hobby-loss rules and rules for small businesses.

Hobby-loss rules...basically you can only write off your expenses up to the total of your winnings. Let's say your boat, gas, taxes, licenses, baits, upkeep, hotels, rods, reels, foul weather gear, cell phone and all your other "business" expenses came to $10,000. And, your winnings came to $3,000. Then, you can write off an amount of expenses equal to your winnings...$3,000. That would bring your taxable "income" from fishing down to zero. But, you simply lose the rest of those "deductions".

Business rules...you need to PROVE to the IRS that you are attempting to make your fishing "business" into a profitable venture. This usually involves typical "business" expenses listed above PLUS add in additional costs for advertising, promotional activities, being a fully licensed/insured guide...anything that proves you are trying to make your fishing endeavor into a profitable business.

Even if your work really hard at making the fishing activites into a "real" business, you can only deduct your surplus losses for three years. After that, you better be making a profit or you better shut down the failing "business". Oh yeah, if you don't shut down the failing "business", the IRS will do it for you!

That's a general summary of the difference between "hobby-loss" and "business" deductions for fishing. Before you consider EITHER type of deductions, as others have warned, get a GOOD CPA to review your plan. He/she will help you set up the NECESSARY record keeping and will guide you through the tax related decisions.

As far as audits, I have many friends who HAVE been audited for deducting bass fishing expenses. YOU BETTER GET IT RIGHT! Or, you'll "get it" in the end (pun intended) from Uncle Sam.

.....NaCl

[MIKE TREMONT]

That's what I said, only not so detailed. Thanks Dean.

Boats still secure as well.