What does the IRS say? Evaluating if your race team is a hobby or a business
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- Опубликовано: 31 июл 2024
- The first step to deciding whether to register a business for your race team is to decide if your team is an expensive hobby or if it can be a legitimate business. Using the 9 factors the IRS uses to evaluate whether a race team is just a hobby or if it is, in fact, a legitimate business, you can decide whether to move forward as a business owner, or continue to enjoy your hobby. In this episode, Liz Joiner, a Florida-licensed Motorsports Attorney, discusses those 9 factors and how they may apply to your race team.
✨The information provided on this channel is for entertainment and informational purposes only & should not be construed or relied on as legal or tax advice for any specific circumstance. I am not your attorney, and viewing or engaging in this content does not create an attorney-client relationship. Before you act or rely on anything discussed, you should talk to an attorney licensed in your state or, if applicable, with a CPA. ✨
~ This Episode ~
00:00 Introduction
03:32 #1 Do you act like a business?
05:14 #2 Are you putting in the time and effort to make a profit?
06:29 #3 Are you dependent on the income?
09:19 #4 Is the loss out of your control or normal for a start-up?
11:45 #5 Have you changed your operations to increase profitability?
14:10 #6 Do you know anything about racing?
15:51 #7 Have you had a successful business in the past?
17:25 #8 Can you make a profit some years, even if you have losses others?
19:04 #9 Will you receive future profits from the appreciation of assets?
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Thanks for sharing Liz. Back in the 80's I joined 2 other friends and we bought a chassis and built a Super gas Drag racing car. We formed a business and raced almost every weekend April through October we formed an LLC I think or some for of corporation and ran it as a business for about 8 years. We never made a profit but had a lot of fun and even won a few championships at the local track in our class. I'M sure the tax laws have changed a lot since then.
Wow! All this info in one place ---- Hat's off to ya Liz!!! So, so many questions answered -- giving power to those in the industry have been asking for a long time!!!! Great Job!!!! Professionalism, front and center! Be Safe
You are so welcome! Thank you!
Very informative. I hope it helps a lot of people in the racing community. Thanks Liz.
I hope so too! Thank you!
Most any hobby can be turned into a business with the right legal team. I raced RC cars in the late 80s. We turned it into a business, everything we did related to the races was a business expense. Funny how we never turned a profit though. Even had sponsors with contracts and everything.
Yup!
Wow you really know your stuff when it comes to the racing business I used to run super late models back in the late 90s and early 2000's never did it as a racing business. Went back to running Street stocks last year I only got a couple races at the end of the and I was trying to think how with the street stock class to do it as a business I mean they have a few big dollar races for our class but you gave some really good pointers I'm doing it as a business. Cuz whether you're running super late or Street stocks you're putting a lot of money into the cars in the haulers. And if you travel there are quite a few big dollar shows but I really enjoyed listening to you talk it thank you I'm sure you gave a lot of us guys hey idea on how to make it a business and not just a hobby. Thank you very much
Thank you!!
@liz I’m an accountant and we race moto! There’s no real appreciable assets nor would that have impact on book profitability only tax (book vs. tax)..the profitability would be most relevant by sponsors more branding as an advertising firm. This statement would apply to maybe a Joe Gibbs team with R&D capitalization and facilities and would impact balance sheet valuation and future profits. Wouldn’t really apply to a team supporting youth or whatever. 501s is a good option with business case of developing youth etc etc through motor sports.
Do you have a way to connect on LinkedIn?!
Hey! I sent you a connection already :-) I am hardly ever on LinkedIn, though!
Great topic … I know you are not a insurance specialist but that is one thing most people don’t understand. Like your trailer\hauler needs separate insurance from tow vehicle.
That is a great topic! I can certainly cover that!
Liz I think you have possibly a great appreciation concept in the new series, a few years down the road someone could purchase the series from you. I’m a little curious is the race team & the series two separate arms of one company or is all under one roof. What I’m thinking is liability reasons so an issue on one side doesn’t take everything down. Really appreciate your knowledge and thing to help racers out.
Two completely separate companies! The liability was one of the reasons we did that!
I was kind of liking the other content you guys were doing. I mean this is good info, but only relates to owning a race team or business owner.
We will get back to some of that once racing starts again!
@High Speed Hustle Sounds great! Don't get me wrong I like both. Just didn't know if the whole channel changed directions.
How To Make A Little Money Racing.....start out with a lot of money.
It was that way 30 yrs ago..
Sometimes! But not always!
Thank you for your information very informative. During the late 1990's through the early 2000's I raced as a business. You are spot on. Wish I were in Milton Florida, I would love to help HTF. I'll be 59 this coming Sunday February 5th. Would they consider an old guy from Missouri helping them? 🤔
Happy early birthday!!!
Does the equipment I own before start up move to the race team assets? Like Truck and trailer, engines, wheels, parts?
Love your content very insightful and im sure very helpful for people but im only here for the free tacos lol
Understandable haha
I love what you are doing. But there was s one thing I would love for you to address. Fighting in racing. There was an incident that happened back in the 80s or 90s. One team beat up another team. (Person=team). Bad where he could not work. As I take it. He was taking a court. And lost his sentence quite unusual. He was forced to turn over all his racing equipment, race cars, and was told he could not race in Florida, or he would go to (jail?). That part I am fuzzy on my friend raced every weekend for 20 years solid in the street stock division he witnessed the whole thing I would love to see fighting in the pits just stopped.This is one reason I had a llc
This was in Brevard County, Fl. and I think it was at Orlando speedworld
That is definitely a great topic!
The easy way to solve the IRS problem is to dissolve them, and only charge sales tax within the our own states
There is actually proposed legislation on this!
🥰
i cant hear the video
It may be an issue with RUclips 🤔