Quote:
Originally Posted by Tim Kish
Question most likely for Julie -
My understanding is sponsorship dollars be handled different ways. 1) Sponsor dollars are entered as income, 1099 is required and income tax is applied. 2) Your racing "business" sells a product (advertising signage). then wouldn't the sponsor dollar be purchasing product for which you would be required (with license) to pay only sales tax on? Option 2 to me seems the most legitimate as the race car / trailer is a traveling billboard (see DOT regulations fore business use of trailer - whole seperate issue) so you are selling a product, not just receiving income.
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1. Sponsor dollars is income, reportable whether you receive a 1099 or not. Depending on your personal tax situation the income will either be reported as hobby income or as business income. The type of reporting determines how your expenses are deducted.
2. You are not selling a product. A product means you are selling something tangible. But whether it's a product or service it's all income. Sales tax varies depending on locale. In California, the sponsor dollars would not be subject to sales tax.