Part-time tennis instructor, what is deductible?

I'm a tennis instructor at a local health club. Basically in exchange for a free membership I am required to teach a clinic once a week for one hour. If anybody wants to schedule a lesson with me, they can also do that and I get paid directly from them. So far my earnings from lessons amounts to less than $100 per month.

Is this a legitimate business that I can deduct all my expenses for? Some examples of my expenses are:

Travel to and from health club. I live far away and have significant driving to do and and also parking expenses. Enrollment fees for tournaments that I compete in locally Equipment fees i.e Rackets, balls, shoes etc.

So are all these expenses deductible?

Reply to
Mr. Nonsense
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On the surface of it, it looks like the cost of your membership is income to you. But that seems unreasonable. Maybe it's a non-taxable fringe benefit, which ARE described in general at

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You can only deduct expenses if you are actually trying to run a business and make a profit. The number of hours you spend on the activity is important. You also have to run your activity like a business, such as keep good business records, have a separate business checking account, obtain business licenses.

If you can't substantiate if your activity is a business, then it is a hobby. Hobby expenses are still deductible, but on Schedule A subject to the 2% of AGI limit. That is, you can only deduct expenses that are in excess of 2% of your income, which quite often means you can't deduct anything at all. Also, if you make very little so that you take the standard deduction, you won't even fill out Schedule A and thus won't get the deduction. In addition, if you make a lot (like

200k but it really depends), then you may be in AMT, and the deduction is not allowed. Please read
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learn more.

Also, if you show a loss in 3 out of 5 years, then the IRS presumes your activity was a hobby. If you've got good records, you can prove them wrong.

Commuting miles from your home to place of work are not deductible. However, what some people do is say their home is their primary place of work. And they schedule clients from their home, do administrative work at home, etc. Maybe even you can meet clients at home for teaching them theory, but this is not necessary. Also, this arrangement is more likely to pass muster if you work at several health clubs. In this case only, the traveling miles are business miles, and parking expenses are deductible. But if your home is not your primary place of work then you can't get away with this. Commuting miles and parking fees are not deductible.

That seems personal. So not deductible.

Yes, these are deductible. However, I'd say that rackets and shoes are assets, whereas balls are an expense. Assets must be written off over a period of years, unless section 179 applies, in which case you can write it off all at once. And then when you dispose of the asset by converting it to personal use, or junking it, or donating it, or selling it, then you have to fill out another form, and you may have to pay tax. My guess is that rackets, shoes, the basket you put the balls in, ball machine are 7 year property. Fees you pay to have rackets restrung are expenses.

Reply to
removeps-groups

Fringe benefits only apply to employees, not sole proprietors.

You seem to have a barter transaction with the health club, which is taxable self-employment income as previously mentioned. Either that, or you might be an employee -- that's the first question. Does the health club have the right to control your work? Probably not.

"If anybody wants to schedule a lesson with me" -- do you promote your service? If not, it's probably a hobby. There are at least eight other factors to look at when considering whether or not you have a "profit motive". IRS presumption based on 3-of-5-years profit (not loss, contrary to previous post) is just a presumption and can be rebutted. Hobbies are just about the worst possible case for income -- taxable, increases your AGI, and deductions very limited.

-Mark Bole

Reply to
Mark Bole

Is there a statute that says this? It seems logical to apply it to contractors too. Then again, the tax code isn't always logical.

Reply to
removeps-groups

The IRC says all income is taxable. Then it provides exceptions to that general rule. There is an exception for certain fringe benefits provided to employees. There is no exception for sole proprietors.

Reply to
Bill Brown

Sounds more like bartering income to me, not a fringe benefit.

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to learn more.

If the tournaments offer cash prizes, it might be allowable....

I'd say that one hour per week doesn't make a business. Now, if you had appointments/lessons all day (or at least available all day) for 4+ days/week, that would be different. Alot is going to depend on your precise facts and circumstances.

Reply to
D. Stussy

Before looking for a statute, try looking for a definition.... ;-)

Reply to
D. Stussy

If it's a barter transaction, the membership helps OP market his business. So it seems to me it might legitimately be claimed as an ordinary and necessary business expense. That is if it's considered a business and not a hobby.

Reply to
Stuart A. Bronstein

Another possibility is the membership is a concesion.

Services provided in certain cases to employees are treated as nontaxable concessions, such as phone service provided to certain AT&T or Verizon employees, or travel offerred to airlines employees.

Reply to
Arthur Kamlet

Page 2

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would seem to applyfringe benefits, in different ways, to both employees and contractors.

Reply to
Arthur Kamlet

How? On Schedule A subject to 2% of AGI?

Reply to
removeps-groups

"NON-taxable fringe benefits only apply to employees, not sole proprietors."

You can confirm this by reading all the exceptions listed in Section 2, each one specifically mentions only employees (or occasionally, former employees, family members of employees, etc).

I think the point of mentioning IC in Pub 15-B in the context of fringe benefits was to ensure the reader knows that fringe benefits to IC should be reported on 1099-MISC and are fully taxable.

-Mark Bole

Reply to
Mark Bole

I agree wih Mark.

Reply to
Arthur Kamlet

Publication 15-B says that independent contractors are treated as employees for working condition benefits and up to $230 of transit passes (but not parking). That is, only these fringe benefits are not taxable for independent contractors.

Reply to
removeps-groups

Which publication talks about concessions?

Reply to
removeps-groups

Well, IRS calls then "No additional cost services" and decribes the no tax effect in

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bottomof page 7, top of page 8. The term "concesssion" was in use when I learned this.

Reply to
Arthur Kamlet

Thanks. This sounds right. My instinct said it was free.

Reply to
removeps-groups

Problem is that OP in this case seems to be more an independent contractor than an employee. That rule doesn't seem to apply to contractors.

Reply to
Stuart A. Bronstein

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