QUOTE(scott thacher @ Dec 10 2004, 06:03 PM)
like racer chris can right off some racing as testing
I actually write off most of my racing expenses as advertising.
I can justify it pretty well based on my business being devoted to 914 custom parts and services, roll cage fab, exhaust systems, etc.
I meet with new and existing clients at the track on a regular basis.
Now I'm also getting into actually advertising for other companies on the car as well.
The IRS allows deductions for "ordinary and necessary expenses" related to a business activity, and it is up to the business to decide what is necessary for the most part.
A hobby business is allowed to write off up to as much as it earns, so a zero net income is fine, but losses can't be taken against other income.
I have always operated my business at a profit with no huge expenses that would raise a red flag, so I don't expect to ever see an IRS agent at my door.