Tax Claims for 2005 Tournaments

[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.

[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

[MsgMills]

If i'm not mistaken, you could claim this money under the Hobby income section, and claim the cost of the expenses up to the amount of the Hobby income...But check with whomever dose your taxes, or call the IRS. They should also have a Publication that pertains to Hobby income and expenses...

The reason I'm telling you this is, because I prepare Taxes for individuals as a Hobby and I have Hobby income, but also have Hobby expenses to offset the income... Contact me if I can help you out any further.

[MsgMills]

Also, it doesn't matter who prepares your taxes to the IRS...You signed the Tax Returns saying the numbers entered are true and Accurate to the best of "YOUR" knowledge. So the IRS holds no one responsible but "YOU". If you had a Company like H& R Block fill out your Taxes for you, then you can only say they filled them out with the info I supplied them with, nothing more, nothing less...

Believe it or not, but I have been Audited about 3 times in my life...I make it a habit of "NOT" reporting 100% of my deductions when I file...Why you ask, because if and when I'm Audited, I then claim 100% of all deductions allowed to the maximum allowed by law that I have to claim... 2 out of the 3 times I was Audited resulted in me receiving another refund, plus interest dating back to that year in question...True Story.... The 1 time I didn't get a refund back after the Audit, was due to a typo error when I prepared my taxes in the first place. Only resulted in giving back part of the Original Refund I received for that Tax Year...

Hope this helps out some for you....

[Lowerider]

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.

Yes, you face similar circumstances in proving you are a professional gambler in able to write-off losses in excess of winnings. Similar to tourney fishing, you can always write-off expenses equal to winnings regardless if you are a pro or not. It gets tricky for state tax purposes; if you live in a state that does not allow itemized deductions like OH you basically get screwed since the losses are written off on Sch A (as an itemized deduction). There are many cases out there regarding this situation and if you're really interested in learning more you could probably do a google search to find more info.

Keep in mind there are many factors for determining whether or not you are a "pro" other than enjoying the activity. Many people love what they do. It's just another hurdle in a long list.

[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.