Runner

Runner made prior year $1000, I figured it was a prize, not subject to self-employment tax. This year, runner won 4 prizes, totalling about $20,000 (several
states). It's starting to smell like S/E tax time for sure. Are my thoughts correct? TIA
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On 3/25/11 9:40 AM, Chuck wrote:

This is a matter of all the facts and circumstances to determine whether the individual runs as a hobby for fun or exercise or runs because it is the way he earns a living or is trying to earn a living. If the latter, Schedule C. If the former, Line 21 and Schedule A.
Obviously I don't have all the facts. It certainly is possible for an individual to travel to different states to run in an event and still have a hobby, especially if he had a regular job or business or trade that was providing the income he needed for his livelihood.
You're going to have to dig deeper.
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Also, if it's Schedule C then the deductions (like shoes, etc) would be allowed in full on Schedule C. Technically shoes are assets that must be depreciated. If it's a hobby, deductions are allowed on Schedule A subject to the 2% of AGI limit (only the amount above 2% of your AGI is deductible), and the deduction is not allowed under AMT. But as running is a very common hobby, maybe the deduction for shoes are likely not allowed at all.
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...
If the shoes are able to be worn for ordinary street wear, then even if the most expensive running shoes available would not qualify as a deductible expense.
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On 2011/03/25 17:54, Arthur Kamlet wrote:

Not to pile on, but I wouldn't think a serious runner's shoes would last longer than a year anyway, so neither would they be depreciable.
As for street wear, back in high school I ran cross-country and track, we had running shoes with screw-in spikes that definitely were not suitable for streetwear. Not sure what prize-winning runners use these days. I suppose street races would require ordinary non-spike shoes.
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On Mar 25, 5:54pm, snipped-for-privacy@panix.com (Arthur Kamlet) wrote:

I disagree with "are able to be worn for ordinary street wear". By this reasoning, no costumes for a acting company would be deductible because it is conceivable to wear these items in street wear. People wore bizarre clothes a hundred years ago, and it worked, so they could do so today, therefore no costumes would be deductible. So I think that the criterion should be if "is worn for ordinary street wear then not deductible". I understand this is a gray line because ordinary running shoes are so ordinary.
As for what shoes runners these days actually wear, I believe it's the same as what regular people wear. No spikes.
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We may have to just disagree. In your scenario, if the clothes are indeed bizarre, I would contend they are not suitable for ordinary street wear.

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wrote:

to
whether
is
Shoes would be a depreciable asset only if they have an expected use lifetime greater than a year. Considering "practice" time, I have a hard time believing that they would last that long. I also have a hard time believing that such doesn't constitute "general exercise" which isn't deductible under the medical rules either, and as for the business rules, I don't see the shoes as being a "costume" i.e. not "street-wearable."
I see no deductions here, other than perhaps entry fees for the races (and even that may be pushing it).
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How about (with the push you talked above) things like travel, lodging, and food, assuming that you were good enough to place high enough to get some actual cash which, at least using the local mini-marathon as a guide, probably wouldn't impact much on US taxes since you are most likely Kenyan (grin)
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In Stemkowski, 82 T.C. 854 (1984) the tax court implies that shoes for professional athletes are deductible expenses if the expense is properly documented. In that case the documentation was insufficient.
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Stu
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wrote:

Sure, you can depreciate it over one year, or expense it.

What about travel to get the the race site, hotel stay, meals?

Is this the case you talk about?
http://law.justia.com/cases/federal/appellate-courts/F2/690/40/107589 /
In this case they also say that off-season conditioning is also deductible if properly documented (bullet 24). So they were very generous. Even specialized newspapers are allowed if properly documented, and they cite a case where Wall Street Journal deduction was allowed but Time magazine was not. It sounds outrageous to me that the court should get to decide what is ordinary and necessary, but in this thread it's conceivable that shoes are deductible if the runner is truly a professional.
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Athletes are prone toinjury, sometimes disabling. With S/E income you'd be building up SS disability credits, but at a price.
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