Tax Questions - What is deductible???

What is the name of your state? NC
My husband put money, time, and effort in building a car for racing. His intentions are to make an income from this career move. He is currently working for a textile company, but if his racing prooves to be profitable, he would like to put all his time and energy into it and make a living out of it. Can any of these expenses be duducted from our income tax. If so, what forms and publications do I need to use?

Account4it said:

What is the name of your state? NC
My husband put money, time, and effort in building a car for racing. His intentions are to make an income from this career move. He is currently working for a textile company, but if his racing prooves to be profitable, he would like to put all his time and energy into it and make a living out of it. Can any of these expenses be duducted from our income tax. If so, what forms and publications do I need to use?

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Sure, how much income have you reported from this racing intrust?

If he intends to make a profit, put all income & expenses on Sch.C. If he's just trying it out to see if he likes racing, it's a hobby and expenses go on Sch.A int he miscellaneous expense section. He can deduct expenses but not time or effort.

Continued...What is deductible???

My husband started too late in the season last year. He did not have any income to report. Do you have to show an income in the new business in order to file this on your taxes?

No, but he does have to show a profit every 5 years or so. Also, if his losses exceed 75% of his income he's in a higher audit category. (For example, a Xmas tree farm would have nothing but expenses for 4-6 years, then would start showing income & a profit.)