Do you do comp and have cater business?

Hozman · Apr 5, 2012

Do you have a catering business and use the same business name as your team name for comp bbq? Since you are representing your company at the comp are you allowed to write off what you buy/use at the comp on your business taxes?

big brother smoke · Apr 5, 2012

Hozman said:
Do you have a catering business and use the same business name as your team name for comp bbq? Since you are representing your company at the comp are you allowed to write off what you buy/use at the comp on your business taxes?

My tax professional has told me to write off my comp expenditures. If it does not work, I will let you know :mod:

GQue · Apr 5, 2012

Yes and Yes...

The way my accountant explained it to me is you have seven years to make money if you dont the IRS will consider it a hobby and not a for profit business, thus not allowing you to deduct things like trailers, pits, supplies, freezers, refrigerators etc.

Last year was my first full year and my accountant allowed me to deduct all the things mentioned above.

butt head · Apr 5, 2012

GQue said:
Yes and Yes...

The way my accountant explained it to me is you have seven years to make money if you dont the IRS will consider it a hobby and not a for profit business, thus not allowing you to deduct things like trailers, pits, supplies, freezers, refrigerators etc.

Last year was my first full year and my accountant allowed me to deduct all the things mentioned above.

same here but we were told 5 yr's. everything for comps is considerd marketing for the catering

jbrink01 · Apr 5, 2012

Yes. What BBS says. So says my tax pro as well.

BasicPatrick · Apr 5, 2012

you guys that are set up and deducting comp expenses; are you set ups as LLC or other type of business?

Ulcer Acres · Apr 5, 2012

But, if they declare it a non-profit business they can go in reverse and then you cant declare it as an expense

jbrink01 · Apr 5, 2012

We are a profitable catering business with sales in the $000,000's and tax exempt purchases that run around 40% of sales, more or less. You do need to be cognisant that your marketing / comp expenses as a percentage of total sales don't raise any red flags. We are also blessed to have a few sponsors, so we include that and winnings as contest income. For ease of record keeping, get yourself 1 credit card and use it for everything business related and nothing else. Pay it off every month. I do know those that use CASH for everything (I'm not one of them), but then that makes this whole dissertation a moot point.

Wampus · Apr 6, 2012

GQue said:
Yes and Yes...

The way my accountant explained it to me is you have seven years to make money if you dont the IRS will consider it a hobby and not a for profit business, thus not allowing you to deduct things like trailers, pits, supplies, freezers, refrigerators etc.

Last year was my first full year and my accountant allowed me to deduct all the things mentioned above.

You mean you have to do it for 7 years BEFORE you can claim it as a "for profit" business or that if you end up doing it for less than 7 years you're at risk of getting nailed for deducting?

Bourbon Barrel BBQ · Apr 6, 2012

Wampus said:
You mean you have to do it for 7 years BEFORE you can claim it as a "for profit" business or that if you end up doing it for less than 7 years you're at risk of getting nailed for deducting?

Basically if you don't claim a profit after the first 7 years are up the IRS will declare your "business" a hobby and stop allowing you to deduct things on your taxes on year 8 and up.

GQue · Apr 6, 2012

Bourbon Barrel BBQ said:
Basically if you don't claim a profit after the first 7 years are up the IRS will declare your "business" a hobby and stop allowing you to deduct things on your taxes on year 8 and up.

Correct - he explained this is very common with horses - People will buy horses and spend hundreds of thousands of dollars on them and they will try to race them every now and then to use it as a business expense - the IRS set that guideline to create a point where you can no longer allow the deductions.

dmprantz · Apr 6, 2012

Does any one do this with a pure comp team, no catering business? My understanding is that as a hobby, you can deduct only as much as your revenue or income, but as a business, you can deduct losses above your income within the timelines mentioned above. Deducting all expenses would be great, but since I don't really cater, I wonder how legal that would be.

dmp

Do you do comp and have cater business?

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