BallReviews
General Category => USBC Tournament => Topic started by: Jorge300 on June 14, 2010, 02:06:28 AM
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To those who have done this for more years then I, I have a Schedule C Tax question around the Tournament costs and winnings.
Unfortunately, this was one of my poorer years at the USBC tournament. In the past I have done a Schedule C, claimed my winnings (bracket and Tournament), offset most of that with the costs associated and shown a small profit. This year, there will be no profit, and the loss that I could show is quite large. My understanding is that as long as you don't show a loss in muliple years straight, you are ok. Does anyone know if this is correct?
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Jorge300
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I file taxes on poker winnings, which may or may not be analogous to winnings in brackets. AFAIK, you can only deduct losses up to the amounts of your win. IE if you made $500 in brackets, then lost $499, you have a $1 tax liability. If you won $500 in brackets, then lost $501, you have $0 tax liability, but no deductions either.
I don''t think it has anything to do with multiple years. If you get audited, just have all your receipts.
I am not an accountant.
Edited on 6/14/2010 10:11 AM
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Baboon,
I know that is true if you file as hobby expense/income, but filing a schedule C, as a business, I thought was different. Businesses can show losses, and I think they start to look at it if you show losses over x number of consecutive years. Just wondered if anyone knew more about this, or has done this in the past. Since this is the first time, in a long time (and first since I started using Schedule C) that I won't have much winnings to offset the costs of going, so was thinking of showing a loss just for this year (hopefully, lol). Thanks.
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Jorge300
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I believe your correct Jorge300, I'll have to find my tax book, but it's different when you treat it as a hobby than as a business expense. The key is doing it the same every year and not like a hobby one year and a business the next. You can only show a loss for so many years like 3 years in a row before the IRS starts to question why you're still in business! If somebody doesn't know before I can find my book, I'll post later!
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quote:
Baboon,
I know that is true if you file as hobby expense/income, but filing a schedule C, as a business, I thought was different. Businesses can show losses, and I think they start to look at it if you show losses over x number of consecutive years. Just wondered if anyone knew more about this, or has done this in the past. Since this is the first time, in a long time (and first since I started using Schedule C) that I won''t have much winnings to offset the costs of going, so was thinking of showing a loss just for this year (hopefully, lol). Thanks.
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Jorge300
The activity has to generate profits three out of five years including the current year per the IRS. It''s assumed it''s for profit if you do this.
http://www.irs.gov/newsroom/article/0,,id=169490,00.html
I believe that if that is not true the IRS could declare the business a hobby and disallow any loss deductions. If that were to happen, I think the IRS would audit past returns as allowed by law and invalid any loss deductions. It used to be three years, and seven if fraud was suspected.
Disclaimer: I am not a tax accountant/lawyer
Edited on 6/14/2010 11:54 AM