Wheel of Forturne

[Inquiring Mind]

Do you know how hard it is to get onto Wheel of Forturne? Let me tell you, when on vacation there was a auditions to see if you could qualify. If accepted you need to go to California for another audition and if finish well here you then make the second trip to be on the show.

Won just under $5,000, so my question is can the audition expenses and Hotel stays for the second audition and actual show deductible?

[veritas]

I'm going to take a spin. You are not in the business of competing on game shows so the answer is no.

[Bees Knees]

I have not read any court cases on this specific situation. However, on a related issue, taxpayers often have gone to court over travel costs associated with gambling winnings. The taxpayer tries to deduct hotel and meal costs incurred while on a gambling trip.

The bottom line is the courts will require the gambler to prove he or she is a professional gambler before any travel costs are deductible. Without a trade or business, travel costs are personal expenses.

[jainen]

only direct costs

>>Without a trade or business, travel costs are personal expenses<<

Just because travel is personal does not mean it is unrelated to the taxable not-for-profit activity. Of course, you couldn't claim a loss and any expenses are subject to the 2% limitation, but if the PRIMARY purpose of the travel is Wheel of Fortune, then I would want to allow it.

It is not enough to say they wouldn't have made the trip except for the show. They must have records to support spending more time on the show than on other activities. If they did the whole L.A. thing on their little junket and didn't keep a diary, only direct costs are deductible.

[Jesse]

Interesting

>>Without a trade or business, travel costs are personal expenses<<

Just because travel is personal does not mean it is unrelated to the taxable not-for-profit activity. Of course, you couldn't claim a loss and any expenses are subject to the 2% limitation, but if the PRIMARY purpose of the travel is Wheel of Fortune, then I would want to allow it.

It is not enough to say they wouldn't have made the trip except for the show. They must have records to support spending more time on the show than on other activities. If they did the whole L.A. thing on their little junket and didn't keep a diary, only direct costs are deductible.

More like Hobby, profit motive but doesn't audition on Wheel of Fortune on a regular basis so not a trade or business?

Or would you consider it gambling so if you have any other gambling losses you can deduct to the extent of your winnings? But no money was spent directly to try to win something, just indirectly to try to get on the show.

Or just flat out 100% other income?

[Bees Knees]

>>Without a trade or business, travel costs are personal expenses<<

Just because travel is personal does not mean it is unrelated to the taxable not-for-profit activity. Of course, you couldn't claim a loss and any expenses are subject to the 2% limitation, but if the PRIMARY purpose of the travel is Wheel of Fortune, then I would want to allow it.

Under what code section would you take a deduction for travel costs?

- IRC Section 162 applies to ordinary and necessary expenses in carrying on a trade or business.
- IRC Section 183 for hobby loss piggy backs on Section 162 and assumes it would otherwise be a trade or business if not for the fact that it is a hobby.
- IRC Section 170 allows out of pocket expenses, including travel costs, as a charitable donation.
- IRC Section 213 only allows travel costs incurred for medical reasons.

What other code section would you apply towards travel costs incurred in trying to win a prize?

[jainen]

production of income

>>what code section<<

I've never seen Wheel of Fortune -- how does it work? If it is a not-for-profit activity, Section 183. If it is a prize, Section 212. Although travel costs generally require certain documentation under the code, there is nothng that says they are not ordinary and necessary expenses if in fact the purpose of the travel is production of income.

[veritas]

"I've never seen Wheel of Fortune -- how does it work?"

You basically jump up and down, clap your hands and act like an idiot. Sometimes the host let's u spin the wheel. The best part is Vanna White.

[jainen]

history of advertising

>>best part is Vanna White<<

Is that old dog still doing tricks? I remember when H&R Block paid her millions to be their spokesperson. I guess they thought she was the very image of a solid accountant, but it was one of the strangest choices for endorsement in the history of advertising.