Tax Claims for 2005 Tournaments

[DJD]

Last year at this time several of you stated that you might try claiming entry fees and expenses. I remember someone even discussing this with an Accountant. Any luck on this? Good or bad? Thanks for any info.

[rudeZ20]

DJD,
I did speak with my tax advisor on this last year and did write off approximatley $3K in expenses last year. It can be written off if you think you will be able to show a profit in doing this in 5 years. It is actually written off as a part time job (amateur fisherman). Talk with your tax advisor and if he is worth his salt then he can show you how to write it off and if he can not then find another tax advisor. Hope this helps,

Marty
Rude Z20

[Fishin_4_Fun]

JMO, but unless you honestly think you can expect to profit from fishing considering all the expenses involved, you are playing with fire, if you get audited.

There was a court case, I remember seeing the findings archived on the internet, where the IRS won a decision against a tourney fisherman. He had to fork up quite a bit of money, including penalties, and interest. It's not a good precedent for others, seeking to "write off" your fishing expenses.

When you use the words "write off", that tells me you're not in it to make money.

I'll see if I can find the link. It was a pretty interesting case.

[Fishin_4_Fun]

Here's the court findings in that case.

http://www.ustaxcourt.gov/InOpHistor...ll.SUM.WPD.pdf

If you are not confident of convincing an IRS auditor, that you are engaging in tournament fishing to establish an income, it will be risky to declare it as a business. You could win your case, but could still be out money and time to prove your claims. And your entire tax records would be scruitinized as well, so it they uncover anything else, you would even be out more.

[DJD]

I know it would be a personal decision for each angler. This topic does scare me some.

[artcarney_agr]

Speaking of taxes.........

Does anyone live in Kentucky but work in Indiana? Just wondering how state taxes are filed with that kind of situation........

[Lowerider]

I am a CPA and prepare taxes for a living. I strongly suggest reading the link Fishin 4 Fun posted to anyone looking to write-off tourney expenses. It is certainly a case by case issue as very few of you are seriously contemplating quiting your jobs to fish full-time to pay the bills. Pay special attention to the section 1.183-2(b) that discusses 9 objective factors the IRS considers in ascertaining intent and note that yes, by merely having personal pleasure in the activity is a strike against you. The more money you make at your regular job also hurts you. How many tourneys would you have to win in order to sustain your current income level? I commonly run into these issues here in KY with clients that like to partake in horse breeding and recently concluded a case with the IRS covering these very same issues. This battle was very expensive for my client even though we won the case. Aside from the interest and penalties you may be charged from the IRS you'll also have to pay someone like me $200+/hour to defend you. Just know what risks are.

I strongly recommend consulting a professional tax advisor before considering writing off your fishing expenses and just because you don't like what he has to say doesn't mean he's not worth a salt.

As far as living in KY and working in IN - no biggie here. You pay state taxes based on where you live and local taxes based on where you work. You should not have to file an IN return (assuming you didn't live in IN at all during the year) unless your employer mistakenly withheld IN taxes from your paycheck.

[DJD]

Lowerider,
Great info! In your opinion does gambling fall under any of the critera of having fun and trying to make money? Once heard that losses in that can be a write off. I know i'm getting off the subject a little but i would love to hear a professional opinion. Thanks.

[rudeZ20]

Oops, sounds as though I might have stepped on someone's toes not meaning too. However you have to admit that second opionions never hurt anyone. It would seem to me that if one advisor said no you can not and another said yes you can then, due to him accepting responsibilty for doing my taxes, it would make sense for me to go to the one that said I can. Am I missing something? If so please advise.
Thanks,
Marty

[Fishin_4_Fun]

Oops, sounds as though I might have stepped on someone's toes not meaning too. However you have to admit that second opionions never hurt anyone. It would seem to me that if one advisor said no you can not and another said yes you can then, due to him accepting responsibilty for doing my taxes, it would make sense for me to go to the one that said I can. Am I missing something? If so please advise.
Thanks,
Marty

I would suspect "accepting responsibility for doing my taxes" does not mean that your tax advisor would be legally responsible to pay your incurred taxes, penalties, and interest, if the IRS disagrees with him, or any expenses and time involved arguing your case.

Declaring fishing as a business, would draw more attention to your tax return. Your decision would come down to whether you would be willing to accept the increased risks of an audit, your time, trouble, money, and how confident you are in proving your case if audited.

Personally, I think if you aren't guiding, or aren't being shown on TV, on stage at the weighins, you probably will can not reasonably expect to make a living fishing.

[CTFSHWHISKER]

someone i know went through this back in the early 90's,he was full time fishing and was making good money after expenses, he did as his tax person said, thought he had everything he needed.they found almost a hundred thousand they wanted to get him for i don't know what they setteld on but they dig up anything and everything they can,not just fishing they had his finacial record for the max years they can go back,farming expenses and all,so unless you are making a lot of money and have your FISH in a school it isn't worth it,i do keep milage,and gas until tax time my tax person said to keep the expenses with each tournament and write those off only,last year i had to show close to 1700 and with miles and gas and room at ky lake they figured 750 expenses for that tournament.but overall it didn't make a big difference either way.

[RoadToad]

Lowerider,
Great info! In your opinion does gambling fall under any of the critera of having fun and trying to make money? Once heard that losses in that can be a write off. I know i'm getting off the subject a little but i would love to hear a professional opinion. Thanks.

You can write off gambling losses, but only if they are equal to or less than the amount of winnings you declare. So if you spent $5000 gambling, and only won back $3000, you can only write off $3000.

Here's where the IRS spells it out on their web site:

http://www.irs.gov/taxtopics/tc419.html