Hire a CPA with a really sharp pencil to set up write offs.

I think this changed several years ago. They said you only have to make an attempt at running a business. You don't have to be successful...

That's been my plan all along! (sarcasm) Gawd this year has sucked! With the equipment that I bought this year, (total of only about $8k), the left over depreciation from last year, and the expenses from this year I might not have any taxable income this year. The good thing about things being slow, is that everyone else is slow too. A lot of cabinet shops going tits up, and I've gotten some rediculously good deals on used equipment.

It's a little more complicated than that.

The "three out of five" rule is part of Internal Revenue Code Section 183 (commonly called the "Hobby Loss Rule") which is a determinant of whether an activity has a "profit making motive". In general, you can only deduct "hobby" losses to the extent of gains - i.e. you can deduct your racing expenses against your winnings.

This would prevent anyone who has a regular day job from deducting regatta expenses from their regular income.

However, if you are a business owner (like Karl), who have an entity engaged in a "for profit activity" (cabinet shop), you can deduct expenses qualified under IRC Section 162 (ordinary and neccessary - like advertising)from your business income without regard to the "3 of 5" rule. However, the quantity of those dedections may come under scrutiny in the event of an audit (was the amount of advertising justified for the size of the business, etc.). For example - if advertising was the largest expense line item for a cabinet shop, it would certainly raise some questions.

As always, keep meticulous records and receipts when dealing with the IRS.

And, if you do get audited, don't take their first ruling as gospel if it goes against you. My dad did 30 years with the "revenuers" in a number of different jobs. The last one was Chief of Conference which was the last place you went before going to court. He told me 75% of their case load was computer entry error.

One year I was expecting about $400 back. Instead of getting the green check I go a form that said I'd paid minus $3.60. They wanted $1000 plus $1500 in penalties. I called dad, who prepared my return. He said he was going to the Fresno data center the next day to discuss the same kind of problems and would let me know what happened the next night.

The day went something like this. He went into the meeting where they shucked and jived him for an hour. He then asked them to pull my return but only gave them my SS#. They passed it around the room and said, "We're gonna screw this guy to the floor."

My dad asked, "Did anyone happen to see who prepared the return?"

No one had.

My dad said, "IT WAS ME!!!"

The rest of the day consisted of him raging through the building and them sounding like Yorkies that just has their feet stepped on.

I wish I'd been there.

You had to go and do that didn't you... I was fine with my head in the sand!!!

Since I don't race my cat, I spend very little per year on my boat. For example, relatively speaking, a "large" sailing expenditure for me last year was to buy $40 worth of line and $100 worth of Vertglass products. So to say the least, I was surprised at what some of you say you spend on sailing in a year. So this little topic prompted me to put together a sheet on my projected ski expenditures for this year.

Ugh!!! 2 trips west, a handful of planned weekends in MI, lift tickets, travel, hotels, etc... my spreadsheet says to plan on about $4k this winter. And that's not counting any spontaneous trips north to chase good snow storms (usually at least once or twice a year), or another set of used powder skis that I may or may not buy this year.

Now I'm beginning to feel shame...

Don't feel shame. According to the registration forms for 20 years of our doing sailing seminars, skiing is the number one second favorite sport of sailors. In fact, maybe for many it is the first favorite.

It's not shame.... it's a HOBBY.

Rarely do things we enjoy make monetary sense

Like crystalmeth

14 regattas X $40.00 = $560.00
Average 400 miles each way at 20 mpg at $4.00 gal = $2240 in fuel 11200 miles
3 days each regatta camping at $ 20 a nite. = $840
One trashed Spin $1000
One trashed main $ 1500 (I got one used)
Annual cost of this fun $6140.00 (est. actual cost may differ)

Next year the north american championships are 865.63 miles each way. Yea Why does my 05 truck have over 100,000 miles on it, its my boats fault.

1783 miles one way for me to HavaMega. I need to get another good mini truck. I had a 97' 2wd extended cab S-10 with a V6, an 5sp. It was semi fun to drive, and actually got pretty respectable mileage. I just can't afford to replace my diesel. New ones cost too much.

$3,329.90 a year to do the thing you love... sounds like a bargan to me...

If you think sailing is expensive , Hire a theripist. How many beach cat sailors you know see a shrink? I don't know any but i know shrinks are alot more expensive than sailing.
Lets not call it racing lets call it theraputic competition and write it off as a medical expensce.

Would these "team-building" weekend courses work for the deduction?

I second that!

Unless you're into production or distribution