Again, only to offset any race prize money you may have won. If you won prize money, that is income. But you no doubt had expenses that were at least as much.
The short answer for nearly everyone is NO DEDUCTION to lower your tax bill.
The "Hobby Loss Rule" is to prevent you from claiming a loss on a pleasurable activity you do as a hobby that is not a business. It doesn't help you at all. If you have a gain on your stamp collection, you're supposed to pay taxes on it. If you have a loss...oh well, no deduction.
Example: You collect first edition books. You sell off your collection for $30,000 on ebay. That is income. You can claim deductions for the cost of the books, the selling fees, any appraisals, etc. If you paid $20,000 for all the books and selling fees, you have a $10,000 gain, you're supposed to pay taxes on that $10,000 gain.
If the books cost you $40,000 and you sell them for $30,000, you have a $10,000 loss. But if you collected books as a hobby, then you can't take a deduction on your taxes for this loss. You can only take the loss if you were selling the books as a business. The IRS will look at are you operating like a business would? Advertise? Spend a lot of time on the business? Keep detailed accounting records like a business? They'll need to be convinced you are a business to allow the loss.
Here are the types of things they say they look at to determine if you are truly a business:
In determining whether you are carrying on an activity for profit, all the facts are taken into account. No one factor alone is decisive. Among the factors to consider are whether:
1. You carry on the activity in a business-like manner,
2. The time and effort you put into the activity indicate you intend to make it profitable,
3. You depend on income from the activity for your livelihood,
4. Your losses are due to circumstances beyond your control (or are normal in the start-up phase of your type of business),
5. You change your methods of operation in an attempt to improve profitability,
6. You, or your advisors, have the knowledge needed to carry on the activity as a successful business,
7. You were successful in making a profit in similar activities in the past,
8. The activity makes a profit in some years and the amount of profit it makes, and
9. You can expect to make a future profit from the appreciation of the assets used in the activity.
For all but a few people actually trying to make money at triathlons/races, you are in this as a hobby and can't deduct your expenses (unless it is to offset any prize money you happen to win...can't have a net loss).
Last edited by:
TriAlbany: Apr 6, 05 11:54