Forum: HoseHeads Sprint Car General Forum (go)
Moderators: dirtonly  /  dmantx  /  hosehead

I'm looking for some help. I have a small business and I'm looking to help a local racer out and I was looking at giving them 10k. I know that I can claim that as advertising, but I'm sure I don't get to claim the entire 10k as a write off. Can somebody with some experience tell me roughly how much true out of pocket money that should cost me?

I'd call your taxpreparer if I were you (if you have a small business, I'm guessing you currently use a CPA to do your taxes).

If not, I'd suggest that you contact a CPA and get some FACTS from them prior to spending any $$$. You may not be able to write off any of the sponsorship $$ depending on your business, as the IRS may not deem sponsorship of a racecar/team as an allowable expense.

Calling Mark Burch! Hosehead's MB resident CPA and race car owner. Where are you Mark?

Signature here.

True, but the IRS also uses percentages to decide who to audit and who not to audit. I would definitely contact your CPA before writing any checks.

jthistel is correct. Many many people (fans) think that "aw they are rich, they just write it off", reminds me of a Seinfeld opsode w/Kramer, "they just right it off". It depends on your adjusted gross income, but in almost all cases, the chance of writing off the whole $10,000 and its not a huge business, are very very slim. Its some advertising, good for you, but in most cases, most of the money comes out of your back pocket.

 Lawlessness and liberalism equals Hell.  NY City, 
Detroit, Seattle, Chicago, Minnepolis, etc. We saw it. 
Burning hundreds of buildings, a thousand assaults and 
dozens of murders. Getting worser and worser.

If you really want to sponsor, don't worry about the write off.

We have a winner! spot on.

as a suggestion, you don't have to give cash to a team. you can arrange to pay for parts or other items. that way you a writing a check direct to a legitimate company. you should be able to still write it off if you have a CPA that knows what they are doing. that may allow you to not have to 1099 the team. you should still ask your tax person to see just how creative they are. some tax people are really sharp and others others don't know how to do anything except what the IRS tells them. in any case helping out a local team that might not get to race, or would be limited on its ability to race is a nice thing to do.

I would offer that if a business can write it off to the tune of like almost 45% depending on their state and federal tax bracket, (if a corporation) this person might invest more, as his 10K only really cost his bottom line 5500 dollars

He/she might give more sponsorship if the 10K only really required them to take 5500 dollars out of their business or personal 'pocket.'

If I was the recipient of this generous offer .... I would try to help this person determine their maximum tax savings by writing this advertising investment off their net income and hope they would invest with me 10K as stated in the poster's original question (savings on their taxes net) by 'buying' avertising maybe closer to 15K with the car owner ...not 10K gross dollars avertising invested that really only 'cost' maybe 5500 dollars.

S.H.S.

if i could get 10k worth of money or parts, i wouldn't care if that was the net or gross of what someone spent. i would be happy to have it. if when it was all said and done my sponsor got half his money back, maybe he wouldn't mind being hit up again next year and i could get another 10k. lol. you are looking for 15k now, but i am looking for 10k a year. lol. remember someone has to put up the money and wait to get it back. you don't have to wear them out all at once.

to indy and beyond!!

Don't want wear a sponsor out is a no brainer ....my reply initially was based on the post that said basically 'don't worry about the taxes..if you want to sponsor just do it'

I only mentioned the sponsor in question MIGHT invest more if he is shown the true costs to his company or personal bottom line.

If as a recipient of sponsorship you TRY to show your sponsors their ACTUAL net cost.... they might sponsor you with more $$$ and that is a winner for both sponsor and car owner.

S.H.S.

no worries. i got a little sarcastic.

to indy and beyond!!

buzz...

I didn't take it as sarcastic ....it is just that I think some businesses could do more for racers sponsorship wise ...if they are shown that.... if they are profitable ..they aren't really spending (net) the whole amount the sponsorship check is written for.

It takes some abstract thinking ....(that more is better in some cases) and hard to put into written words ...

I know I (and probably 99.9% of the posters on here) would rather give it to a racer than the government ANY DAY... If you are able to write it all off ...and the net it actually cost you is maybe only 55% or so ..... you might decide to invest even more $$$ if you are made aware of the ACTUAL net cost to your bottom line.

S.H.S.

here is the way i see it, and i could be wrong.

someone is still paying out the money to begin with. if they get some of it back they are still paying some of it to the government and some to the team. a person is only saving a percentage of the amount of money they would be taxed on if they didn't spend the money.

how how much they "save" depends on how much they would have been taxed.

if their net income was $200,000.00 before a 10k sponsorship then instead of being taxed on that 200k they would be taxed on 190k. the difference in what they would have paid in tax on those amounts is what they would "save". that 10k may or may not have very much of an effect on what they pay in taxes. now you are correct, if they gave 50k, they might see it make a substantial difference.

still they are not really saving anything because they are giving something to someone else. now if they were buying something that they were keeping, then they would save on taxes and still have been able to have something in their hand that was theirs. did i ramble too much? lol.

what really helps is to be able to bring a sponsor added revenue in a value over what they have put out in sponsorship. then they can write off the money they gave you for a tax credit and still have made money. the thing is, at the local level, it is hard to do that. that is why most local sponsorship comes from people who are fans of the sport and and are willing to help those in it.

we can have fun going over things and adding our 2 cents worth, and that is fine. that is what we all do. still it is nice to see someone interested in helping someone. as long as we don't screw the whole deal up analysing it. lol.

to indy and beyond!!

buzz:

I agree totally that it depends hugely on their 'tax bracket' ... it also depends on the state of incorporation or their business is located in as various state corporate/business income taxes can fluctuate wildly ...

I too, am pleased that ANY person/business is interested in sponsoring any sprint car team be it a 305 or a WoO team.

S.H.S.