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Can one deduct cost of a kit car as a hobby?
Can anyone confirm if the cost of a kit car (or parts upgrade) exceed 2% of one's adjusted gross income, that one can deduct the cost of your Cobra car (or parts) of one's "hobby" on the 1040 Schedule A form?
(The IRS defines a hobby as an activity that you pursue without expecting to make a taxable profit, i.e. not making a profit in at least three tax years of the past five tax years, including the current tax year. Afterwards, a profitable sale of your hobby is taxable as a capital gain on your tax return, but a loss upon the sale is not tax deductible on your tax return.) |
I think the answer to your question can be found here: Click here.
The key point is that some hobbies generate taxable income for the hobbyist. In that case, the cost of the hobby can reduce the net income earned. If your hobby does not generate income, you can't deduct its cost. P.S. I'm no tax expert, but I did drive by a Holiday Inn Express once. |
Ask Jay, he does it all the time.
http://www.clubcobra.com/forums/texas-cobra-club/76121-new-expectant-father.html |
No Hobby Income,No Hobby Expense Deduction.
The expense deduction can't exceed the income either. Tommy is dead on. |
Thanks
Thanks... that all makes sense. Why can't the IRS write the code and explaination just as plain and simple?
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Even if you did find a way to generate income from your "hobby", it might give you some problems in other areas, such as insurance. Any attempt to generate income with a car should be discussed with a CPA that is familiar with small business taxes, BEFORE you start. |
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The more the confusion,the more the mistakes.The more the mistakes.the more they get in penalties & interest. |
Fred, Can you tell me what your avatar photo is? :confused:
I've seen alot of avatars but yours is very different. :eek: Is it some kind of sex toy or idol? %/ |
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That's Frenchy the bongo playing frog in the middle! I wish my avatar was my sex toy! :CRY: :CRY: |
Fred, Can you tell me what your avatar photo is?
That is Frenchy in the middle,playing the bongos after using that harpoon the kill the javelina on her left. I've seen alot of avatars but yours is very different. Is it some kind of sex toy or idol? She thinks of herself as a sex toy. Just ask Big Jay. :) |
Frenchy the Bongo Playing Frog! :LOL:
Frenchy is a she? WOW! What is a "Frenchy the Bongo Playing Frog"? %/ Where did Frenchy come from (background history)? :confused: |
You can, if you use it to advertise a company. We race sprint cars and have our business name (among other sponsors) on the car. It's tax deductible for all of us. If you can figure out a way of opening up a business and using your cobra as advertising, it's the same situation.
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I think you deduct whatever you want...it's a matter of opinion. In an audit though...it's the irs's opinion that matters. Personally I would have a hard time looking someone in the eye telling them my Cobra is a legitimate and necessary deduction though. But curiosly, FunFer2...are you saying the total cost of your car, upgrades and maintenance or just the cost of putting letters and logos are tax deductable? Be anonomous because you never know who's watching.
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Who's watching. lol
It's just like any company advertising in the news paper, phone book or a billboard on the highway. Ours is just a very fast moving, billboard. And yes, it's all legal. |
Funfer2...Just to clarify, The whole cost of the car is deductible? John
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Wait a minute..I've been involved with a few charity car shows, could this be
used in anyway for a deduction?. |
If the entry fee was a donation to a 501c(3) charity then you may count that as a charitable contribution. As far as the paint job, wax, etc goes to show off the car at an event, I'd be skeptical.
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With all the upkeep and parts and ???, I should at least be able to claim it as a dependent.:):):)
Dave |
Deduct
Yes you can. But the info doesn't come cheap.
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I doubt the cost of the WHOLE car could be deducted as an advertising cost?
If so, then I'm slapping a business sign on MY Cobra and deducting the cost of the car and 'over head' immediatly! In fact, my 'period correct' sponsor decals should do just fine. :D |
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