Race boat sponsorship
04-14-2002, 12:35 AM
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RBS,
The answer would in part depend on your filing status. As a corporation, whether straight C or Sub S, expensing it as advertising would be the most probable. If you're sponsoring the boat individually and trying to deduct against 1099 income, it's still advertising, but if you show a NOL on your schedule C for 3 out of 5 years, IRS may invoke the hobby loss rule and all of the prior deductions may be disallowed. This will also apply if the boat you're sponsoring is your own.
I'm assuming your sponsorship is from your business? Let's assume for example, you owned a hotel, motel etc. and You filed it's operations on a Sched. C, as part of your overall personal 1040 return. You had the name of such property on the boat you were sponsoring and spent X amount of dollars for that placement. In that situation, advertising as an expense would be appropriate. However, depending on your profession and tax status, you might be disallowed losses in excess of a certain amount if your adjusted Gross Income exceeds a specific threshhold. (normally $150,000 AGI) in which case, Real Estate losses are limited to $25,000 against ordinary income.
As to the above, I'm speaking of Federal taxes, I am not familiar with your State tax regs.
Safest bet is to contact a good CPA. If you don't have one, drop me an e mail and I'll give you the phone number of the CPA who does our tax work.
Take care,
Steve
The answer would in part depend on your filing status. As a corporation, whether straight C or Sub S, expensing it as advertising would be the most probable. If you're sponsoring the boat individually and trying to deduct against 1099 income, it's still advertising, but if you show a NOL on your schedule C for 3 out of 5 years, IRS may invoke the hobby loss rule and all of the prior deductions may be disallowed. This will also apply if the boat you're sponsoring is your own.
I'm assuming your sponsorship is from your business? Let's assume for example, you owned a hotel, motel etc. and You filed it's operations on a Sched. C, as part of your overall personal 1040 return. You had the name of such property on the boat you were sponsoring and spent X amount of dollars for that placement. In that situation, advertising as an expense would be appropriate. However, depending on your profession and tax status, you might be disallowed losses in excess of a certain amount if your adjusted Gross Income exceeds a specific threshhold. (normally $150,000 AGI) in which case, Real Estate losses are limited to $25,000 against ordinary income.
As to the above, I'm speaking of Federal taxes, I am not familiar with your State tax regs.
Safest bet is to contact a good CPA. If you don't have one, drop me an e mail and I'll give you the phone number of the CPA who does our tax work.
Take care,
Steve
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