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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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Unread 03-11-2013, 07:57 AM   #1
bruno994
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Default Hobby Expenses...

Anybody out there claiming your BBQ comp expenses as "Hobby Expenses" on your taxes? My understanding is as long as you don't show a profit for more than 3 out of the next 5 years, you can continue to claim your 'Hobby".
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Unread 03-11-2013, 09:15 AM   #2
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I think you need some real tax help...
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Unread 03-11-2013, 10:49 AM   #3
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Let us know how that works out for you.
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Unread 03-11-2013, 11:02 AM   #4
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This seems backwards to me. I always thought it was: if you don't show a profit in 3 out of 5 years the IRS could classify your business as a hobby and not allow your deductions?
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Unread 03-11-2013, 11:17 AM   #5
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http://www.irs.gov/uac/Business-or-H...for-Deductions

Among other stuff there is this tidbit:

"If an activity is not for profit, losses from that activity may not be used to offset other income. An activity produces a loss when related expenses exceed income. The limit on not-for-profit losses applies to individuals, partnerships, estates, trusts, and S corporations. It does not apply to corporations other than S corporations"

You need to talk to a tax person but I believe this means that you could offset any winnings with your comp expenses but not in excess of your winnings. You can not claim all of your comp expenses if this is not a business in which you have not been profitable in 3/5 years or have a reasonable expectation to be profitable.
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Unread 03-11-2013, 01:06 PM   #6
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Prepare to be audited and make sure you take your check book with you. Keith
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Unread 03-11-2013, 01:43 PM   #7
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Quote:
Originally Posted by speers90 View Post
http://www.irs.gov/uac/Business-or-H...for-Deductions

Among other stuff there is this tidbit:

"If an activity is not for profit, losses from that activity may not be used to offset other income. An activity produces a loss when related expenses exceed income. The limit on not-for-profit losses applies to individuals, partnerships, estates, trusts, and S corporations. It does not apply to corporations other than S corporations"

You need to talk to a tax person but I believe this means that you could offset any winnings with your comp expenses but not in excess of your winnings. You can not claim all of your comp expenses if this is not a business in which you have not been profitable in 3/5 years or have a reasonable expectation to be profitable.
thats what my tax lady said..up to but not over any winnings. cant show a loss just offset.
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Unread 03-11-2013, 02:16 PM   #8
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I'll worry about bringing in the winnings. Don't have a problem with expenses to offset.
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Unread 03-11-2013, 02:23 PM   #9
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Default Re: Hobby Expenses...

I too had heard that you could deduct expenses up to and including winnings, I even bought 2 Gurus to ensure my expenses where more than my winnings but when I put it all into TurboTax it did not seem to make a difference in the taxes owed. Be curious how it works out for you.

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Unread 03-11-2013, 02:38 PM   #10
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Ryan (speers90) is correct, we do this. You should always double-check with your accountant though, as each person's situation may be different.
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Unread 03-11-2013, 03:07 PM   #11
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Quote:
Originally Posted by speers90 View Post
http://www.irs.gov/uac/Business-or-H...for-Deductions

Among other stuff there is this tidbit:

"If an activity is not for profit, losses from that activity may not be used to offset other income. An activity produces a loss when related expenses exceed income. The limit on not-for-profit losses applies to individuals, partnerships, estates, trusts, and S corporations. It does not apply to corporations other than S corporations"

You need to talk to a tax person but I believe this means that you could offset any winnings with your comp expenses but not in excess of your winnings. You can not claim all of your comp expenses if this is not a business in which you have not been profitable in 3/5 years or have a reasonable expectation to be profitable.
Ryan has quoted the source document.

The key is that hobby losses can not be used to offset other income.
For the vast majority of us, this simply means that if we are fortunate enough to bring in some winning, we can deduct our expenses to offset them, but no more than that.

As always, you need to consult a tax pro and not the WWW about your situation.

TIM
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Unread 03-11-2013, 06:19 PM   #12
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Im so glad I have an accountant
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Unread 03-12-2013, 09:22 AM   #13
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Quote:
Originally Posted by speers90 View Post
This seems backwards to me. I always thought it was: if you don't show a profit in 3 out of 5 years the IRS could classify your business as a hobby and not allow your deductions?
yes...thats exactly it
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Unread 03-13-2013, 04:58 AM   #14
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I bought some new tongs last week. That will certainly offset any winnings I have had so far....
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Unread 03-13-2013, 08:40 AM   #15
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You folks go ahead and claim you some expenses for a hobby to offset tax liability from any other income (capital gain, W-2, 1099 other than BBQ winnings, K-1) and see if you can get any tax software or any accountant worth paying to legitimize this.


You had better not be claiming a "home office" too....
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