NOTE: Getting to write off your next day of sport shooting might sound great, but if your goal is to outright cheat the government then you should probably think twice. Getting audited or accused, let alone convicted, of tax fraud just isn’t worth it.
The IRS is not friendly. They are not nice people to deal with. But they are not going to put you in prison for negligence either. Everybody makes mistakes and mistakes are quite different from fraud. It is not fraud to be a trap shooter struggling to make shooting into a profitable business…not at all! So, for quite a few years you may show a loss and no profit on your tax forms. This could trigger an audit, but not always. The audit process is not as horrible as you may think it is. For trap shooting, they will simply ask for proof of expenses. So you just print out your expense sheet from the computer program and mail it in. They may want receipts for certain expenses, so you send them a copy. No big deal.
What if you get attacked by some belligerent IRS agent who hates trap shooters and wants to disallow everything? This is how it will go down, “You had other sources of income and you could afford to lose money so you did not have the intent and profit motive to make money…your shooting is a hobby.” What do you say? “I would have been better off by not trap shooting at all in the first place. I lost money, my money. My deductions are legal and I have operated my business in a serious and professional manner. I can’t help it if I lost money. It’s a tough world out there. I compete with professional trap shooters and I have earned money in shooting (option money) and as time progresses I will earn more and turn a profit.” That ends the matter.
You will likely not be challenged by the IRS, but it can happen so here’s a few things you should know. You have to prove that you are not shooting as a hobby, so you:
- Maintain books and records of expenses and winnings in a businesslike manner. Computers help you do this very easily. Make sure you get a receipt for all practice fees, meals, etc., and enter it in the computer.
- You have lost money years before but have changed something to correct the loss to help you from stop losing money. Like taking trap shooting lessons, buying books, magazines, videotapes, a new gun. Getting your gun professionally fitted, installing a recoil pad, etc. Doing just one of these things each year or all in one year. The point is…do something to help yourself shoot better so you can improve your odds to win and earn money. You may not win, but you did try to stop the losses.
- Play the option money at registered shoots. The 25/50 option is a good place to begin as you will likely start earning money very quickly. It may not pay nowhere near your expenses, but it is proof that you did in fact “earn money and the registered shoot was a business activity.” You don’t want to be filing tax returns that show $15,000 in losses and $0 in income. $15,000 in losses and $400 income is better. You won’t owe money in taxes but you’ll get your deductions and a nice rebate check in the mail next year!
- You act professionally. You consult with other top-gun shooters asking for tips and instruction on how to improve your shooting ability. This is where lessons come in handy to satisfy any audit in your favor. You consult with the Small Business Administration for advice on operating a business and maintaining records.
- You make a serious effort to make a profit. This does not mean you have to spend 40-hours per week trying to make a profit. Not at all. Trap shooting may only be a sideline business for you, but when you do trap shoot you are serious about it. Again, playing the options reveals the serious intent to make money. You may think of this as gambling but all businesses are gambles.
- You have profit potential. Even if your trap shooting business continues to lose money, you are an artist. Like a writer who has to write for years before s/he finishes that first book — and even then may never be able to sell it and make a profit. The fact is that you wrote the book, putting in the effort with the “intent” to sell it to a publisher. Now, “My Life Story” won’t qualify just as “I Love Trap Shooting” won’t get you any points with the IRS. However, if you have earned money from the options here and there and your scores are actually climbing too you’ll be okay.
- A bad year or two. It is common to all artists to have a bad spell. Writers get writer’s block and trap shooters get slumps. Same as with golf pros and boxers and…you get the idea. When you are in a slump increase your practice or start buying books, videotapes, take lessons. Do something to improve yourself and improve your chances of making a profit. It’s the attempt you make that counts here. If you simply do nothing then it shows you are not serious and you have no profit motive and just using shooting as a hobby.
- Past success. If you have won shoots in the past, won money and prizes of any value and you are competing in a professional environment (registered shoots) with the intent and ability to earn money, you will be okay with your business deductions.
- Keep a log of business contacts you have made each year. Names of shooters you have consulted with asking for advice is a good method. It’s also a good way to meet new friends.
- All the “technical” books you buy and lessons you take can be deducted from taxes. A book that just talks about trap shooting isn’t going to pass the test. But technical books will be tax deductible! A shooter who is audited and simply hands in as evidence “Trap Shooting Secrets” and Precision Shooting books is going to demonstrate to the IRS you are a serious shooter and not just a casual hobby shooter…the books are very technical and only a serious shooter would buy them to improve the chances of earning a profit.
- A trap shooting magazine, such as Shotgun Sports Magazine, will qualify as a deduction as the content is rich in technical instructions. So is the Trap & Field Magazine, Clay Shooting Magazine and Pull Magazine. A Guns & Ammo type mag may not qualify for a trap shooting business as it is not dedicated to clay target shooting.
- You can, if you wish, setup a separate bank or checking account just for your business. It helps to establish with the IRS (if you are ever audited) that you are indeed running a legitimate business. But it is not necessary with the computer programs today that can filter out all the business expenses from personal expenses. What you don’t need is a bank’s business checking account. They will hit you will outrageous fees. Just open up a normal checking under your name or just use your current account as is.
You are not operating a typical business with a physical location so you don’t have to buy a copying machine, get a business card, business phone, business bank account or register for a typical business license. There are no customers to serve. You don’t even need a resale license as you are not selling anything. You don’t register your business period. There are no zoning rules. You simply file tax form “C” each year with your taxes. It’s that simple!