Tow fund payments

[mmi16]

Have the Tow Fund payments from the Runoff's been sent out?

[Steve Davis]

I got mine mid October.
Steve, FV80

[mmi16]

Thanks

[steve everard]

What's the contribution work out to ? is it per mile ?

Thanks Steve

[Steve Davis]

contribution? you mean to the effort ?? I guess
The TOW FUND is distributed across all (almost all) Runoffs entrants. It is based on the mileage from your ZIP CODE to the ZIP CODE of the Runoffs venue .. which means most of us lose about 50 miles in distance. As best I can gather, all 'travel miles' (beyond whatever the minimum is .. I think it's 300 miles) are added together and divided into the total of the tow fund that has been 'acquired' by SCCA from our entries (think it's $5 per National entry - not sure what happens in 2014) to come up with a 'payment per mile'. Then it's parsed out to the entrants. So you can never tell in advance what it will be.

In my case I received a little over $400 - enough to cover about 60% of my FUEL costs for the trip up and back. My calc's and my odometer says it's pretty close to 1000 miles each way. I have no idea what mileage SCCA credits me with, but pretty sure it's a good bit less than I actually travel.

It'll be interesting to see how much is paid out for travel to CA next year. For sure, the 'payment per mile' is going to go WAY down. The CA guys have been doing pretty decently in the past since they were the only ones traveling MANY MANY MANY miles. When you turn it around and a much higher percentage of the participants are traveling those miles, the total miles will be MUCH MUCH higher, but the tow fund will still be about the same assuming participation stays about the same.

I wouldn't be surprised to see myself getting 'not much more' than what I got for Wisconsin, although I'll be traveling 2.5 times the distance PLUS.

Of course, ANY money is better than none. The biggest gripe I have with it is that SCCA insists that they have to give you a 1099 so you HAVE to pay TAX on it - despite the fact that you spent 10 times that much for the event ... so you really only get about 3/4 of the amount you get .. Obama gets the rest...

Steve, FV80

[steve everard]

Thanks Steve appreciate the info, Will be very interesting to see the total fund miles paid out next year compared to 2013 Road America.

[budawe]

The actual contribution is $15 per entry. In 2014, only the Majors will be collecting tow money and the contribution amount has not been decided. While distance from the event determines a competitor's share, the total amount available is based on total contributions during the current year. Historically, there have been some sponsor contributions from hosting tracks and others, but that has not been determined for 2014.

[bimmer635csi]

cThe biggest gripe I have with it is that SCCA insists that they have to give you a 1099 so you HAVE to pay TAX on it - despite the fact that you spent 10 times that much for the event

A way around the taxes may be to LLC your racing effort and keep track of what goes in and what goes out. If more goes out than comes in, it could help lessen the tax burden.

I'm not an accountant, its just my accountant tells me to do this for a rental house that I have.

Just an idea, and now that I think about it, my house rental isn't even through an LLC, so that probably doesn't even have to be done.

[Steve Davis]

...
Just an idea, and now that I think about it, my house rental isn't even through an LLC, so that probably doesn't even have to be done.

"HOBBIES" are treated differently than rental houses. The only thing that remotely resembles our racing activities is GAMBLING. Fortunately, for gamblers, IRS allows THEM to deduct expenses against earnings. In our case, however, NO DEDUCTIONS are allowed. So... if you spend $32,000 attending races and "earn" $1500 from a 1099, IRS expects you to PAY TAXES on that entire $1500.

Using a company to receive the money is a viable way to get around it, but you must be careful how you handle it.

Steve, FV80

[racerdad2]

My favorite business expense is 'marketing'... I'm not a CPA & don't play one on TV....

[Darryl Wills]

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.

[budawe]

Thank you Darryl. A voice of reason and facts on a forum.

Considering advertising expense, it must be a usual and customary expense for the business envolved. Deducting a ton of racing expense for, say a accounting business, as advertising expense does not meet the IRS test of U&C. If you are an engine builder and sponsor a customer....different story.

Creating a phony company to shield your self will probably fail the "intent to make a profit" test from the IRS as well.

[bimmer635csi]

Shows you what I know.

Oh well, I should have figured the tax man wouldn't leave any squeeze room.

[gbmetcalf]

When I bought the Lazer project my Lawyer suggested an LLC. For the racing business to protect my assets. Not to hard to show a profit every 5 years so I can continue to have a business verses a hobby.

My favorite accounting term is deductible.

[SStadel]

Hobby income is line 22 (front page of the 1040) income. Hobby expenses, up to the extent of Hobby income are deductible on the Schedule A, Itemized Deductions (page 2 of the 1040). If you don't itemize and take the Standard Deduction because you have few itemized deductions (house is paid for, property taxes are low, etc.) you may lose the expenses.

Some states (Illinois being one of them) do not take into account itemized deductions, so your income from your Hobby would be taxable to that state, even if you did itemize.

[Hardingfv32]

How does the tow fund work relative to the Conference and Division points system? Is the tow fund allocated to one or both?

Brian

[GT1Vette]

How does the tow fund work relative to the Conference and Division points system? Is the tow fund allocated to one or both?

Brian

Pending BoD approval next week, National will collect tow fund money for Majors (conference) events and it will be paid to those earning Runoffs invitations via the Majors path. Any Runoffs travel funds for those pursuing the Divisional path will be collected and paid by each division.

[BWC54]

Pending BoD approval next week, National will collect tow fund money for Majors (conference) events and it will be paid to those earning Runoffs invitations via the Majors path.

That's a great system. First they increase your costs by making you tow much farther to events and they charge you tow fund money on top of it.

[Bruce]

I am in the region that the Runoffs are being held. We were given the opportunity to stay in region to qualify. This is a once in a 40 year chance, we have been given. It is all good. Thanks for the rest.

[GT1Vette]

That's a great system. First they increase your costs by making you tow much farther to events and they charge you tow fund money on top of it.

Tow fund money ($15/sanction in 2013) has been charged for all National events for at least fifteen years, then every dime collected is paid out to Runoffs attendees.

On edit - I got paid travel money the one time I attended the Runoffs as a driver in 2000, and I suspect it's been in effect even longer than that...

[BWC54]

Tow fund money ($15/sanction in 2013) has been charged for all National events for at least fifteen years, then every dime collected is paid out to Runoffs attendees.

I know that tow money has been charged in the past. My point is that I used to be able to run at least 4 double Nationals a year 50 and 90 miles from home and now the closest major is over 300 miles with most of them being significantly farther than that. That ads to my cost not to mention the additional time it takes. So run regionals you say. Well the geniuses in the SoWDiv screwed those up too. No more doubles. 2 qualifying sessions, 2 - 20 min qualifying races, 2 - 20 min feature races counts as one regional. And they put FF in the SRF group.

[budawe]

BWC54, your experience is not unique. Well before the Majors, trying to make enough weekends on the west coast to earn tow money was always a loosing proposition. Usually the cost of one race weekend exceeds the amount of tow money received so it's never been a motivating factor for me. I did enjoy winning divisional championships.

I've received tow money for over 30 years and the amount has never covered the fuel costs incurred in going to the runoffs but's it's been a nice add on.

At least now, there will be two paths to the runoffs and folks will be able to choose.

[Josh Pitt]

. And they put FF in the SRF group.

and now there will be zero FF cars racing in the region.

-Nostradames