I like Snaggletooth's explanation on past posts about cost of good sold. My concern is, if I use that and hence the 1099 will end up zeroed out, will the IRS have a problem with not seeing it on the return? I would like to avoid a cp 2000 or something if possible.
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Your post is a wee bit confusing. Cost of Goods sold has nothing to do with the race car business. His total winnings will also be gross profit, for after all, he is selling nothing.Originally posted by Super Mom View PostChEAr$,
Harlan Lunsford, EA n LA -
...but without no entry fees, gas or tires no money could be made. Snaggletooth's past explanation to the IRS makes perfect sense, was accepted by them and I think is acceptable by the definition of "cost of good sold". My concern is the return showing nothing for income with a 1099--can I break this down on some form for line 21?Comment
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If it is a hobby: Line 21 for income, Schedule A miscellaneous income for expenses (subject to 2% of AGI).
If it is a business: Schedule C for income/expenses (no COGS, but you can have expenses on Page 1)MichaelComment
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Re: Snaggletooth's explanation...about COGS
It all depends (yuk-yuk) who's doin' the racin' and sellin' and who your audit rep is, AlabamOriginally posted by ChEAr$
. If memory serves, I believe the Snagster convinced the Bogeyman a few years back that gas 'n' oil and such was COGS for his down a few bills racer.
Snag said somethin' about it a few posts below -- maybe he'll come up and give us the lowdown and maybe a solution for S-Mom's zero-sum.Comment
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