Bass fishing and Income Tax deductions Bass fishing and Income Tax deductions
Bass Fishing Home PageTM    Other Fishing Topics  
Boating Equip.
Guides
Tackle Shops
Fishing Acc.
Lodging


7-11-2013

Fishing Reports
BFHP Articles
Fishing News
Tournaments
Fishing Tactics
Places to Fish
Rods/Reels
Electronics
Boats/Motors
Boat Ramp Stories
Trailers/Towing
Props
Other Topics
Other Fishing Topics
Swap/Sell
Swap/Sell (no boats)
Props 4 Sale

Boats 4 Sale
Saltwater Fishing
Non-Fishing
Striped Bass
Lure Making
More Politics
Co-Anglers


Other Fishing Topics

    Bass fishing and Income Tax deductions
from Lynn (206.28.32.46)  
12/30/2000 11:12:00 PM

Rated:

 Wondering how much trouble it is to classify bass fishing as a business for tax purposes.

Uncle Sam rips you a new one if it is classified as a hobby. This is what I found out. Your expenses can't exceed your earnings AND you can only deduct the expenses exceeding 2% of your Adjusted Gross Income.

For example:

My AGI- $100,000

2% of AGI $2,000

Tournament winnings $3,000

Tournament expenses $5,000

You have to report $3,000 as additional income, but the maximum allowable deduction is only $3,000 because it can't exceed the winnings. And the first $2,000 (2% AGI rule) of that $3,000 expense is not deductible because it's classified as a hobby.

So only $1,000 of your $5,000 in expenses can be deducted. The bottomline is that your losses ($5,000-$3,000) are $2,000. But on your income tax form your reported income for your hobby is $2,000 ($3000 in winnings -$1000 allowable deduction).

Where's the vaseline?

Please correct me if I'm wrong.


Rate this message:
1 Star

2 Star

3 Star

4 Star

5 Star

   Not in my case from Bassman Ia. (209.240.220.169)  12/31/2000 9:42:00 AM
 Won a boat in 1999, Uncle Sam wanted to bend me over and take 6400.00 out of my pocket----- WRONG. When my CPA was finished i came out REAL good. If the IRS wants to play the game, take em to the limit. I am now writing my boat and everything that goes with fishing off for the next 6 year. I didn't start it---- they sent me a 1099 with their hand out. Play to win.


   Your only bet... from Rex  12/31/2000 11:27:00 AM
  To come out ahead, make sure your CPA can cut the mustard. The one I had in '98 let the gov. take me to the cleaners. Made the switch in '99 and she saved me big $$$. The key is getting one that knows the in and outs...C-U-FISHN'


   Agree with Bassman from Bass Assassin  12/31/2000 5:34:00 PM
 I won a boat in 96 in a tournament. If this happens to you, make sure to talk to a good CPA. His cost will be covered in what he knows. I can atest to that.

BA


   bassman, rex from Lynn (206.28.32.36)  12/31/2000 5:41:00 PM
 I assume you are classifying your fishing as a business then. As a business I believe you can write off everything, and can use depreciation on equipment. There are several "subjective" guidelines that need to be met to classify it as a business, and I hear you need to have all your ducks in a row, and a good CPA. If you take the business route and get audited, and shot down by the IRS, there could be some serious financial repercussions.

How many bass fisherman really believe they can buy new boats, trucks, fishing tackle, then pay for gas, property taxes, insurance costs, motel expenses, traveling expenses, entry fees, etc, then fish tournaments and pay all these expenses with your winnings and have enough leftover to take care of all your expenses at home. If you classify it as a business, you need to show that's your intent.

IMHO, in my mind, the only way I could genuinely classify tournament fishing as a business with an intent of making living, would be to have sponsors paying for everything. In other words being a touring professional.

IMHO, anyone who REALLY believes they can make a living fishing tournaments considering all the expenses, without having sponsors doesn't quite have a full load upstairs.


   Tournament Fishing--Business VS Hobby from Mike Whitten  12/31/2000 7:05:00 PM
 Lynn, I am a CPA, have been since '77, and in the above posts there are some facts, some assumptions, some errors. I've written on this subject before on this board, even sold an article to Operation Bass, last year, but they never published it. This is a reasonably complex issue, but it is NOT a given that if you have a full time job, but seriously pursue tournament angling, that you cannot classify it as a business. It depends on several tests of "hobby vs business", and the production of income is only one of about 7 or 8 issues. It is true that if you treat it as a hobby, then you must report income, cannot deduct losses, and are limited to certain other deductions as a % of AGI(Adjusted Gross Income). All that said, the LAST thing you want to do is file a tax return on the basis of fear of the IRS. Unless you CLEARLY commit fraud, the worst that you will owe is the taxes you would have paid anyway, plus some interest. Mike Whitten/Memphis


   income tax from Sliderman  12/31/2000 7:19:00 PM
 As always, Mike is exactly right in his comments. I have been a practicing CPA since 69 and while profit motive is not the only criteria, it carries the most weight. My advice is to find a knowlegable CPA with experience in the hobby loss area and seek his advice, not just find one that has the answer you like best. Whether tournament fishing is a hobby or a business is a decision you ultimately will make on your return and should be based upon the facts and circustances of your situation. You should have the best advice available before reaching that decision. Good luck and Good Fishing.


   Interesting, from Mr. M. (24.4.252.17)  12/31/2000 7:21:00 PM
 Hello Friends.

My government agency is anxious to hear more of your stories. Please help out more people by providing facts, such as name, ssn. etc.

Just want you all to help.

Mr. Mike. Fishing Audit examimer.


   MR. Mike--Fine Example from Mike Whitten  12/31/2000 7:44:00 PM
 Hey Guys, Mr. Mike from Washington is a troll, and I know it, but assume that he is for real---because he is exactly the level of auditor most of you will see from the IRS--Can't write well, can't spell, and knows little more about the tax code than you do. An audit is an annoyance, nothing more. I've been through 3, all on Schedule C, second business issues, and all had no changes. If you have a legitimate position, understand the law, keep the records and TAKE THE DEDUCTIONS. Remember this--you have less than a .01% chance of being audited on a personal return with a taxable income of less than $100K. If you are entitled to deductions and don't take them, do you think the IRS will call you up and remind you to amend that return??? One more time, if you get audited and lose, all you are out is taxes you would have paid anyway, some personal time, and perhaps some interest on the taxes. That's it! Mike Whitten


   Bussiness as a pro from Bassman Ia. (209.240.220.151)  12/31/2000 11:50:00 PM
 I didn't mean for anyone to assume that is what this CPA listed me as. To list you as a pro it has to be your only source of income or all income has to be fishing related( speaking, boat shows, ect ) As far as being audited, i kept asking this CPA if everything he was deducting was legal because talking to the IRS would not be the highlight of my day. First off he said" I'm not about to risk my license to save YOU money and two, if the IRS wants to talk, You won't be there, i will be there that's what you pay me for. One more thing tax related------ For 15 years i had a bookeeping service take care of my needs, besides the usually taxes i had a schelude C and other things. I went to this CPA after my regular service did my taxes last year, and would not allow for any expenses that occured with this tourney boat. Besides last years tax return that was prepared by bookkeepng service i took the 2 years previous. By reviewing these 3 years of tax returns he figures i was hosed for 20K that were allowable tax deductions if the last 15 years of returns were filed the same way. The ironic thing is his fees were only $15.00 higher then the bookkeeper that was not a CPA.


    Bass fishing and Income Tax deductions from Bassman Ia. (209.240.220.151)  12/31/2000 11:51:00 PM
 I didn't mean for anyone to assume that is what this CPA listed me as. To list you as a pro it has to be your only source of income or all income has to be fishing related( speaking, boat shows, ect ) As far as being audited, i kept asking this CPA if everything he was deducting was legal because talking to the IRS would not be the highlight of my day. First off he said" I'm not about to risk my license to save YOU money and two, if the IRS wants to talk, You won't be there, i will be there that's what you pay me for. One more thing tax related------ For 15 years i had a bookeeping service take care of my needs, besides the usually taxes i had a schelude C and other things. I went to this CPA after my regular service did my taxes last year, and would not allow for any expenses that occured with this tourney boat. Besides last years tax return that was prepared by bookkeepng service i took the 2 years previous. By reviewing these 3 years of tax returns he figures i was hosed for 20K that were allowable tax deductions if the last 15 years of returns were filed the same way. The ironic thing is his fees were only $15.00 higher then the bookkeeper that was not a CPA.


   ???? two post with a push of the button, sorry N/M from Bassman Ia. (209.240.220.152)  12/31/2000 11:53:00 PM
 .


   BassManIa--More on your comments from Mike Whitten  1/1/2001 8:28:00 AM
 BassMan, With all respects, your last post just proved my point again. 1. Your CPA does not "list" you on a return as a pro or an amateur(hobby). This determination is made by the forms filed in the return. By your indication above that you are "writing off your boat and everything that goes with fishing over the next 6 years" is a VERY clear indication that your CPA has filed a Schedule C in your return and will deduct your "fishing expenses" as a business loss over the next several years. He has determined that because you earned and reported income in one or more years, you met the income test that will allow for future deductions of losses. 2. Your statement that in order to be "listed as a pro" all your income has to be from fishing, or fishing related business" is ABSOLUTELY WRONG. The tax code specifically does not say this! It is perfectly legal to hold a full time job, or run a business outside the fishing industry that provides the bulk of your income, and still report earnings and expenses from fishing as a business. The core issue of hobby vs business is that with a hobby you must report income and cannot deduct losses, where with a business you can report losses on Schedule C that reduce income from other sources, thus reducing the final tax bill you have to pay. Again, please understand I'm not "jumping on you", but I think it is important for folks who want to pursue tournaments as a business or a career to have the proper understanding of the related tax issues. Mike Whitten/Memphis


   Taxes from Chad Lizana (209.214.154.216)  1/1/2001 1:32:00 PM
 Mr. Mike Whitten, someone like yourself needs to write a book on this subject $$ Better yet design user friendly software for us Bassfishermen $$


Name:

Password:

Can't remember your password? Click here!
State:
Email Address:

Users with subscriptions can attach pictures to their comments by using the form at http://www.wmi.org/newboard/upload_pictures/"

Subject:

Comments:


 

Advertising/Sponsor Information
Subscriptions
Register to post messages and reports

7-11-2013

Subscribers don't receive these ads


Fishing Reports
BFHP Articles
Fishing News
Upcoming Events
Rally Page
BFHP Surveys
Fishing Tactics
Places to Fish
Rods/Reels
Electronics
Other Topics
Product Evaluations

Boats/Motors
Boat Ramp Stories
Trailers & Towing
Boats For Sale
Tournament Tactics
Striped Bass

Swap/Sell
Clubs 
Fly Fishing
Hunting
Props
Fish4
Saltwater Fishing
Non-Fishing 2
Political Hook
Tall Tales, Fiction & Legend
Complete Listing of Boards
Copyright © WMI, Inc. 1995-2014. All rights reserved.
This message board created and maintained by: WebMasters International, Inc. (WMI) address mail to wmi@wmi.org

WMI disclaimer
Privacy Statement

Google