JD, definitely ask your daughter, but I do taxes for a living... For what it's worth,
it's probably a hobby even if it is under your business name. As a hobby, you can
take all of your expenses straight off all of your hobby earnings, up to the amount
that you earned, but no more. Meaning, if you spent $800 and won $100, you can
use $100 of the costs to zero-out the winnings and pay no taxes on the winnings.
I always take the tack of "what if you're audited". IF you can show that it's a true
business expense, an expense of the business itself and NOT a hobby, then it's
treated as any other business expense. However, honestly, it'll be very tough to
explain this to an IRS auditor, UNLESS you actually vend at the contest. In that
case you'll want to separate the vending costs from the competition costs. It
gets murky here. Some will just say that the competition is basically advertising for
the vending and a cost. That's a tough sell to an IRS auditor with a clue. As
vending thereby being a business, the vending expenses (food cost, set-up, travel,
etc) are considered expenses, but only those attributable to the vending. Without
getting into details, the tough part will be mileage, etc.
I believe Ford does this quite a bit (vending at comps as well as competing). I'm
sure he deducts trailer costs, as it's needed to vend. I'd ask Ford about the mileage,
etc. and how/if he separates it.
Speaking of Ford, I haven't seen him around in a while....
Best of luck with it.