Anyone deduct hobby expenses?

[CLP]

I've been perusing the IRS site for acceptable deductions and ran across this:

"Hobby Expenses
You can generally deduct hobby expenses, but only up to the amount of hobby income. A hobby is not a business because it is not carried on to make a profit. See Not-for-Profit Activities in chapter 1 of Publication 535."

So let's say I sold a Garand for $1000. It's not income since it's part of my gun collecting/shooting hobby and doesn't significantly augment my overall income. Does that mean I can deduct a grand's worth of reloading supplies, other guns, etc?

I know, I know, I know...contact my accountant. Just curious if anyone else is aware of this deduction- or has actually used it. I'm trying to figure out how I can spin some potential purchases to my wife.

 

[chemist308]

***? Seriously, you can do this?

 

[rcmodel]

I wouldn't even try it.
Especially with buying & selling guns as a hobby.

Something about the current wind direction in Washington that I would not Even want to possibly get on the radar screen for flying to low, or high in it.

Myself and tax policy has always been, just pay it & move on.
I ain't got time anymore for an audit triggered by something petty like 'hobby expenses'.
Legal, earned, or not!

Especially, if the hobby is guns.

rc

 

[Onward Allusion]

I used to be a bean counter. Short answer - NO. Longer answer is a little more complicated. In any event, if you decide to go that route, you better get a FFL.

 

[CWL]

You declare, you lose.

 

[CLP]

What if it was $1000 worth of gun/hobby related items- not a firearm itself. I'm actually going to ask my accountant about this during tax time. Even if it's doable, I don't see it being beneficial to me. I don't really ever sell anything. But with what I'm paying in taxes, I'm looking for every break I can get.

 

[ErikO]

I do but then again I have a company set up to run training and soon will be getting my 01/03 and then adding gun smithing.

 

[Nick Burkhardt]

For a home business you have to show a profit in two out of five years or it is classified as a hobby and you lose any prior deductions for expenses.

 

[rogerstg]

"Hobby Expenses
You can generally deduct hobby expenses, but only up to the amount of hobby income. A hobby is not a business because it is not carried on to make a profit. See Not-for-Profit Activities in chapter 1 of Publication 535."

So let's say I sold a Garand for $1000. It's not income since it's part of my gun collecting/shooting hobby and doesn't significantly augment my overall income. Does that mean I can deduct a grand's worth of reloading supplies, other guns, etc?

FYI, your Garand sale IS income. There's probably no taxable income though because you deduct the basis (think cost) from the proceeds. But even if you sold it at a profit, using the hobby loss rules that you cited, you would deduct the expenses related to owning/maintaining/testing etc. However, you can't get the profit below zero.



** Disclaimer: Any tax advice contained in this communication is not intended as a thorough, in-depth analysis of specific issues, nor a substitute for a formal opinion, nor is it sufficient to avoid tax-related penalties.

 

[rogerstg]

For a home business you have to show a profit in two out of five years or it is classified as a hobby and you lose any prior deductions for expenses.

FWIW, the 2 out of 5 rule is a safe harbor provision. So if you show a profit for 2 of the last 5 years, the IRS cannot say it's a hobby. The inverse is not true, there are plenty of bona fide businesses that lose money in more than 3 of 5 years and are not considered hobbies. There are a bunch of factors to consider in determining if an activity is a bona fide business or a hobby.


** Disclaimer: Any tax advice contained in this communication is not intended as a thorough, in-depth analysis of specific issues, nor a substitute for a formal opinion, nor is it sufficient to avoid tax-related penalties.

 

[Reloadron]

Read This!

If I decide reworking M1 Garands is my hobby business there are limits as to what I may or may not deduct. I will need specialized tools for example, which to a point can be deducted. Heck, just read the link.

Ron

 

[AlexanderA]

So let's say I sold a Garand for $1000. It's not income since it's part of my gun collecting/shooting hobby and doesn't significantly augment my overall income. Does that mean I can deduct a grand's worth of reloading supplies, other guns, etc?

If you're not in the business of selling guns, the Garand is a capital asset. That means you have to take your basis (cost) into account. Let's say you bought it for $600 and sold it for $1,000. You have $400 of taxable capital gain. This goes on Schedule D and is netted with your other gains and losses.

Of course, 99% of hobby gun sellers don't do it this way (because there's no information reporting on these types of transactions), but that's the "proper" way of doing it.

 

[Robert]

I know, I know, I know...contact my accountant.

Bingo. As this is more about financial advice than guns I am shutting it down.