Taxes on Tournament winnings

[Fishtails]

I know this subject has come up before and as I recall the general feeling was your tournament winnings (over $600) get taxed at 30 some percent. We had our yearly appointment with our accountant today and the subject came up. What an eye opening experience going to the accountant can be. I found out I spent $9500 last year on fishing....and that didn't Include boat upgrades, maintenance and repair (another $7500) And I'm sure plenty of you guys spend way more than I do....Wow, is this is an expensive hobby!!! Even worse was that my wife found all this out at the same time There's a little explaining going on In the Keyser household tonight...

Anyway...My accountant, who Is pretty by the book, said the couple thousand we won last season was a wash because we can write off the expenses of fishing the tournaments. So unless you win more than you can show you paid out (a level I doubt I'll ever achieve), your winnings are offset by expenses. After he saw what I spent as opposed to what I won he just chuckled and said It was a wash .

Just thought some of ya may want to know that. Of course, don't take my word for It....I'd suggest you ask your accountant.

[on the lam]

Rod, being a business owner, can't you "entertain" clients on the boat and write off a portion (or all) of the nut as a business expense?? No accountant here, just a thought....

[Time Out]

I was told by my accoutant that unless you are a charter captain, you can not write off tournament/boat expenses. It is a hobby and the tournament is a form of gambling. Hope she wasn't wrong. If she was, the govt has some of my money

[ladyblugill]

you're accountant is correct time out.been there, done that, a few times...it's considered a hobby.

[rail bird]

I don't think have to be a charter captain to fish tourny's as a business but you do have to show profits in certain years for it not to come under hobby loss rules. If you fish lots of tournaments it might be worth your while to document your expenses and read the mind numbing 1040 instructions.

[rail bird]

Just to add, what fish tails accountant is doing is writing off his expenses against his winnings only. If you can document the expenses directly related to the fishing tournament is greater or equal to what you won you do not have to pay tax on the winnings. What you can not do is write those expenses off against your regular income unless you are under regular business rules and not hobby loss rules.

[Fishtails]

Yea...what rail bird said I'm just passing along what I was told. I don't pretend to know....that's why I use an accountant. Been using the same guy a long time and I trust him. Just something you may want to look Into.

Rod, being a business owner, can't you "entertain" clients on the boat and write off a portion (or all) of the nut as a business expense??

I don't know, but I'd guess you could? I've never taken a client with me so I have not given It any thought?

[jimski2]

A friend of Mine "won the boat" "FIRST PRIZE" one year. He got hit with the income taxes on the list price of the boat. His teammates? wanted their share of the prize. He asked them to come up with their share of the income taxes, he would sell the boat for what they could get, and then split up the proceeds. Needless to say, no one came up with the income taxes, the boat sold for 50 cents on the dollar on the list price and to this day six guys do not talk to each other. The hardest part was the loss of the friendship for all of them. You can win the contest, but do not get your friends involved and clearly understand all the consequences if you do win. It is best to allow the guy who catches the winner keep the prize and let him deal with the taxes.

[Fishtails]

I got a little more info on this today. It seems my accountant's brother fishes the pro bass circuit, so he was pretty familiar with this subject.

As far as paying taxes on tournament winnings, It's a cumulative amount through the year. Basically you keep ALL your receipts of tournament/derby expenditures throughout the tournament season and deduct that amount from all your monetary winnings. If you're In the red at the end of the season it's a wash and you pay no taxes on your winnings. If you show a profit, then that amount is subject to tax.

[Lund SSS]

Funny this topic came up, I just won the Steelhead division in the fall the tax rate I broke into was alittle more than 30%. When all was said and done they (IRS) hit me for 48% of my winnings. Word to the wise, don't pay your fishing partner half till you take out the taxes! $2600 ended up netting me 400 bucks.

Tights Lines,

Steven

[Fishtails]

Steve.....that stinks dude! Didn't you 1099 your fishing partner? That would have alleviated you of the obligation of paying taxes on his half . Then, after deducting your derby expenses "for the entire season" you could have mitigated that somewhat, or paid no taxes on your winnings at all. Before handing over a check...you really should get that person's social. Then you 1099 them on the amount they won and you won't get the shaft. Winning should be fun!

Once you get paid, It's no longer a "hobby" and you have to treat it more as a business venture. That being said, I have no idea what I'm talking about so definitely consult your tax adviser

[LIQUID PLUMBER]

I just got my 1099 today from the Oak for the PRO_AM !

DEL

[ladyblugill]

A friend of Mine "won the boat" "FIRST PRIZE" one year. He got hit with the income taxes on the list price of the boat. His teammates? wanted their share of the prize. He asked them to come up with their share of the income taxes, he would sell the boat for what they could get, and then split up the proceeds. Needless to say, no one came up with the income taxes, the boat sold for 50 cents on the dollar on the list price and to this day six guys do not talk to each other. The hardest part was the loss of the friendship for all of them. You can win the contest, but do not get your friends involved and clearly understand all the consequences if you do win. It is best to allow the guy who catches the winner keep the prize and let him deal with the taxes.

thats why it's nice it's all cash now. makes things simpler. we also won a boat back in the early 90's. fortunately it was just me and my dad so things didn't get ugly and nasty.i won't go into all the details but will say we didn't have to pay taxes on the list price.hopefully your friend didn't register it before he sold and paid sales tax too.also we got lucky enough to catch the fish on the last weekend of the summer derby so we scooped the 2500 cash also in the tournament of champions which helped out with the tax loss. still in the end and in hindsight i think fishinman was the biggest winner in that derby...

[skipper19]

Take your accountant out on a few trips...if you own a business you can write off some of the expenses involved with fishing as entertainment of a client. Advertise your business on the side of the boat and write off some expenses there as well. Some of those AIG execs like to fish, find one and get some bailout money, tell the IRS bailout was for the bilge pump failure...Ok that's it I'm all outta suggestions. I always wondered why the IRS agent came to my house all fired up and then left as a babbling idiot

[rail bird]

One thing to be aware of, winning money in the LOC may be treated much differently than the Pro Ams or Scotty type events. In a two day tournament it is clear that your sole intent to be on the water that day was to fish for prize money. That is difficult to prove in a LOC style event. So writing off things like fuel, tackle and lodging against winnings might be diffficult. You certainly can dedudct the entry fees against the winnings.

Funny this topic came up, I just won the Steelhead division in the fall the tax rate I broke into was alittle more than 30%. When all was said and done they (IRS) hit me for 48% of my winnings. Word to the wise, don't pay your fishing partner half till you take out the taxes! $2600 ended up netting me 400 bucks.

Tights Lines,

Steven