Horse barrel racing

[JanMi]

My client has winnings and expenses from horse barrel racing. Do I put this on a Sch C? This is her 1st year

with this income, her winnings were $3200.00. She received no 1099's. She has expenses that are more than

her winnings that she can deduct. Thank you.

[grandmabee]

is this a hobby and business? once that's determined then you have your answer. line 21 and Sch A or if business sch C

[Ranger]

Barrel racing can be an expensive "activity". $3,200 probably does not begin to cover the expense.

Although this opinion should not be cited for authority; T.C. Summary Opinion 2005-97 is a good example of the position the IRS is likely to take in a similar situation.

[kcjenkins]

It's going to be considered a hobby in any audit, because anything to do with horses is automatically considered by IRS as hobby unless you can prove it's a business, and operated on a regular basis as such, with great records, etc. Put the income on Line 21 with no SE income, and the expenses on Sch A.

[Jack from Ohio]

... and the expenses on Sch A.

subject to 2%

[JanMi]

Thank you everyone for you input. At first I was going to enter everything on a Sch C, but after reading your comments that this type of activity could

trigger a audit I didn't want this for my client or myself. I put the income on line 21 and all the expenses on Sch A. Thank you again for your comments, they are really appreciated.

[kcjenkins]

A wise choice, especially given the small amount involved. If she later becomes really serious about this sport, teach her the great importance of good record keeping, and keeping a log that shows how it all ties together. There are some serious competitors that truly make it a business, but it's not easy to do, and impossible without great records.