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Competition BBQ *On Topic Only* Discussion regarding all aspects of Competition BBQ. Experiences competing or visiting, questions, getting started, Equipment, announcements of events, Results, Reviews, Planning, etc. Questions here will be responded to with competition BBQ in mind.


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Old 02-22-2012, 08:25 AM   #1
BC Squared
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Default Comp Team as a Business?

Anyone have their team set up as a business for tax purposes? Could this help recoup costs assuming you weren't winning every week??
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Old 02-22-2012, 08:32 AM   #2
Still Smokin
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I was wondering the same thing or something similar.

If we are taxed on prize money, shouldn't we be able to deduct expenses?

Can this be done on a schedule C?
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Old 02-22-2012, 08:33 AM   #3
Bourbon Barrel BBQ
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Yep my team is setup as an LLC.
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Old 02-22-2012, 08:54 AM   #4
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DISCLAIMER - (I deliver babies.. not tax forms)

Seems like there is a tax rule that you can only show a loss in a "business" for a limited number of years before it becomes a "hobby" and you can't deduct a loss on a "hobby"... But i think you can still offset winnings with documented expenses.

Maybe some tax professional can chime in...
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Old 02-22-2012, 08:58 AM   #5
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My comp team operates under my catering llc, so yes, it's financial performance factors into my tax liability.
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Old 02-22-2012, 09:01 AM   #6
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Quote:
Originally Posted by Nordy View Post
DISCLAIMER - (I deliver babies.. not tax forms)

Seems like there is a tax rule that you can only show a loss in a "business" for a limited number of years before it becomes a "hobby" and you can't deduct a loss on a "hobby"... But i think you can still offset winnings with documented expenses.

Maybe some tax professional can chime in...
I'm no tax professional, but I would just change the "business name" every few years if you cannot turn a profit with it. different name, different business. maybe.
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Old 02-22-2012, 09:02 AM   #7
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Cater a few times a year and pay a little tax on the income
win win
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Old 02-22-2012, 09:11 AM   #8
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It's a hobby so you can offset expenses against income. Just can't take a loss. No need to incorporate. Just keep receipts and fill out the IRS form.
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Old 02-22-2012, 09:41 AM   #9
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We cater a time or two...so that seems like the way to go. Any other suggestions are appreciated!
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Old 02-22-2012, 09:51 AM   #10
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You can claim hobby expenses up to the amount of reported income...however, hobby expenses are subject to the 2% of AGI restriction. Assuming you did have any other 2% deductions you would pay tax on your winnings - up to 2% of your AGI.

...At least that is the way I read the form and instructions.
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Old 02-22-2012, 10:17 AM   #11
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LLC here.
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Old 02-22-2012, 10:34 AM   #12
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Ford is right.. that's what I do.
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Old 02-22-2012, 04:46 PM   #13
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LLC here for 2012.


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Old 02-22-2012, 06:21 PM   #14
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LLC in 2011.

It's cleaner for us to keep the team's finances totally separate from the restaurant books.

Avoids the unpleasant surprise of the Head Cook getting 1099s on his personal taxes. Won't save you any money though. If you win more than you spend, you're gonna have to give the gubmint their cut, plain and simple.
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Old 02-22-2012, 06:35 PM   #15
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Quote:
Originally Posted by Ford View Post
It's a hobby so you can offset expenses against income. Just can't take a loss. No need to incorporate. Just keep receipts and fill out the IRS form.
I am a tax pro. I dont/wont offer tax advice here. However, this IS the correct answer. Unless you're actually a caterer, etc. and this is a business, there is no need to LLC, etc. However, like Civil said above, IF you are a caterer or in the restaurant business, you may want to do it for any number of reasons; he gave a good one.

All expenses, gas, mileage, rubs, fuel, meat, entry fees, etc. etc. etc. can be used to offset any winnings. Very few teams, when you factor in ALL the costs, actually have to report $$$ income.
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