Fishing & Boating News
(Feb. 20, 2014 - Forestville, WI)
When the only things certain in life are taxes and death, advice about how to deal with paying what is owed and not becoming an IRS target attracted huge audiences at the recent National Professional Anglers Association annual conference.
The entire conference dealt with the theme, "Motivate and Inspire." Numerous speakers and various sessions dealt with all phases of business, sponsors, winning ways, insurance, youth angling events, a fund-raising banquet, media, panels of experts, and topics dealing with new fishing, electronics and marine products - and taxes.
Nate Pinkham, a St. Paul CPA explained the difference between fishing as a hobby and professional fishing as a business. "Essentially," he said, "Treat fishing like a normal business or it's considered a hobby." To him, this means keeping a separate bank account and a separate credit card for the fishing business. "To be safe, make sure there are no overlaps with personal or household finances," he said.
To his estimation, the majority of anglers don't make a profit from fishing. The question to ask (and will probably be asked if an audit occurs), "Is your goal to make a profit or is this just for fun?" Since people cannot deduct hobby losses, making a profit or attempting to do so is the key question. A business can only take losses three out of five years before red flags start flying.
Treating fishing as a business means acquiring a name and filing the name with the secretary of state. Also important are federal and state ID numbers. Most anglers are self-employed and a LLC corporation is the direction most take. "Get a letterhead, maintain records carefully as expenses and income occurs," Nate said.
Regarding records, he said good records kept as part of a tournament log would include all travel, miles, dates, conferences, events, shows, retail appearances, media events, potential tournament winnings, and all expenses. He said, "Usually, professional anglers will elect to deduct actual expenses, rather than claim mileage. He said, "Vehicle depreciation can be expensed, along with lease payments, insurance, repairs, taxes, licenses, tolls, fuel, maintenance, etc." The actual cost of meals and lodging while traveling may be deducted.
Declaring a home office as a deduction received an emphatic, "No Way!" from Nate, who continued, "It is too small of a deduction and throws up a red flag." This is the biggest invitation to an audit in the entire tax world, he confided to attendees.
Record keeping was a constant theme, and he warned all to keep records for three years, but to be safe, hold onto them for at least five years. "In everything you do," he recommended, "Show the opportunity about how much you could have won." If fishing is a business, make it just that, and he also advised anglers to consult with a hometown CPA for further answers and suggestions.
NPAA Supporting Partners include: Advanced Tex Screen-printing, Cabela's National Walleye Tour, The Walleye Federation, Evinrude Outboards, Fishouflage, Frabill, Plano, Great Lakes Sea Grant, Lund Boat Co, Mercury Marine, Milwaukee Muskie Expo, Navionics, Nebulus Floatation, Optima Batteries, Outdoor First Media, Pure Fishing, Ranger Boats, Skeeter Boats, The Next Bite, The Reel Shot-Home of the J.J. Keller Fishing Team, Triton Boats, U.S. Forest Service, Wildlife Forever, Worldwide Marine Underwriters, Yamaha Motor Co., Arrowhead Promotion and Fulfillment, Bait Rigs Tackle Co., G2-Gemini, Heartland Payment Systems, Kingfisher, Larson Boats, Liddle Marketing Company, Motor Guide, Mutual of Omaha, National Fleet Graphics, Northland Fishing Tackle, Oahe Wings and Walleyes, Off Shore Tackle, Pasha Lake Cabins, PK Lures, RDM Insurance Company, Simms Fishing, Strike King, SmarTech Inc., Warrior Boats, High Tech Fishing, Financial Planning Services, Lowe Manufacturing Co Inc, and O2 Marine Technologies Inc. More NPAA annual conference news, member and association news can be viewed atthe npaa.net website.
Phone:903-882-8877 or 903-882-8878 — Fax: 972-619-8776