Thread: Didja Know....
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Old 06-09-2005, 02:16 PM   #9
The_Kapn
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Quote:
Originally Posted by BBQchef33
Quote:
Originally Posted by parrothead
However, if you have a bbq related business, and competing and using this thing along the lines of competing, and is all a part of your business, then deductions and depriciation are in order. Of course you need to claim any prize money also.

So if i claim the winnings from last year, i can write off the cost of the food, registration fees etc..? and depreciate the cost of the trailer?
YUP, but....
Short version:
All income of this type is "taxable". All allowable expenses are deductible (to a point).
IF "BBQ COMPETETION" is a HOBBY--deductions are limited to the amount of income from the hobby. Specifically, you can not use "Hobby Expenses and losses" to offset other income.
IF "BBQ COMPETETION" is a BUSINESS--Same rules except you can offset other income if you have a legitimate loss.
So, the issue is...HOBBY or BUSINESS??
If it is a BUSINESS, most people take the proper steps to make it a real and legitimate business. This might be (but not limited to); advertising, creating a formal business structure, licensing, seperate financial records, etc. Lots of possibilities and "the more-the better".

I have been involved in "side businesses" for 30 years or so. A legitimate business is a great thing. I pay my taxes on profit and take my losses as they fall.

A Hobby you think is a Business can get you into problems if you offset other income with it.

I am an amateur--talk to your financial guy to get the full "skinny" on all of this.

And, yes, fully equipped RV's meet the requirement for "second home interest deductibility". We do that also.

TIM
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