I do a lot of races where the proceeds of the races go to charities. I had been told by someone that i could use my entry fees to these races as tax deductions. Does anyone know this to be true or the regulations regarding it?
Is racing a hobby or profession for you? Do you claim all your race winnings as income? My opinion is that the entry fee wold not be deductible - deduct all or some of your entry fees merely because you give “some” of your race proceeds to charities?
When you get a race winning do you first cash the check and then give it to the charity? Or do merely sign over the winnings?
I hate to tell you this, but the winnings from races is probably taxable income, the entry fees are not deductible, and the donations are deductible only if you show it first as income (which means that it offsets).
As tax time approaches… assuming it is a profession (for my wife), then virtually everything she(“we”, as I am her #1 “sponsor”) spends on the sport to get her there, stay (if no homestay), equipment and entry fees (if not comped) can offset her earnings. In other words, her professional expenses and earnings can be managed similar to a Schedule C Business. Would you concur with that?
The key is keeping airtight records and making sure that you declare the winnings as income as well as the expenses.
Thanks/
I had been told by someone that i could use my entry fees to these races as tax deductions. Does anyone know this to be true or the regulations regarding it?
Wait for the CPA’s for confirmation, but generally, charitable contributions are only deductable for the amount of the contribution that exceeds the actual value of the item received. As an example, at a charity auction, you “win” an item valued at $50 with a bid of $75. The incremental $25 over the actual value of the item would be your allowable charitable contribution. Seems to me that race fees would be handled in the same manner. If the normal cost of a similar race is $50, but you pay $125 for entry to the charity race, it could be argued that the additional $75 was allowable as a charitable contribution.
Now we can wait for the tax guys to tell us the real truth! 
As tax time approaches… assuming it is a profession (for my wife), then virtually everything she(“we”, as I am her #1 “sponsor”) spends on the sport to get her there, stay (if no homestay), equipment and entry fees (if not comped) can offset her earnings. In other words, her professional expenses and earnings can be managed similar to a Schedule C Business. Would you concur with that?
The key is keeping airtight records and making sure that you declare the winnings as income as well as the expenses.
Thanks/
I’m not a CPA.
I would be very careful in expensing all of the equipment–especially bikes. If you do, then you need to declare the proceedes of selling the used bike as income. This would go for any material parts you resell.
Consumable items, travel expenses, and race fees are easier to justify. Make sure everything is 100% airtight if you are going to resell material goods.
Assuming your wife makes this her business, and she is a sole proprietor, then Sch C is where you would put all your related income and expenses. If you are incurring yearly losses, then after a certain point the IRC classifies you personal activity as a hobby. Try to show a small profit, and move some grey area expenses to the personal side, so you can continue to expense on the Sch C. Just a suggestion.
Note that the OP is asking about entry fees as charitable contributions. Not business expenses.
You may be right. When I originally read the question I got that he wanted to deduct the race winnings as a charitable contribution, which is OK as long as you declare the winning as income. As far as expensing the ENTRY fee as a charitable contribution, well you can’t do that even if the race is for charity.
thanks for that. She’s a pro and has won some $$, but she’d definately show a loss in 2008. WRT bikes etc. I’d depreciate them over X years assuming I can find them on a 179 list. It will be irrelevent this year as they were bought in 07. Plan is to get free bikes in 2009. I’ve done the home business thing previously, so I am quite familiar with Schedule C. I just wasn’t sure whether “professional athlete” could be documented as a business, or if there is a better approach.
This thread got thrown off topic but David in FL has the right answer…
"charitable contributions are only deductable for the amount of the contribution that exceeds the actual value of the item received. As an example, at a charity auction, you “win” an item valued at $50 with a bid of $75. The incremental $25 over the actual value of the item would be your allowable charitable contribution. Seems to me that race fees would be handled in the same manner. If the normal cost of a similar race is $50, but you pay $125 for entry to the charity race, it could be argued that the additional $75 was allowable as a charitable contribution. "
More specific to your question, if you do an event that is for the benefit of a charity and you wrote a check to that charity for that event, the technical answer is your check to the charity minus the individual cost of putting on that event equals your charitable deduction.
Another reason to like trail running. Very cheap for the RD to put on event.
Disclaimer…the above does not constitute tax advice for you. Just general info.
Thanks for the replies. That is pretty much what I thought. Just wanted to check to make sure I wasn’t missing out on something. Oh well. Thanks again for the input.