Race Car Expense Should Be Deductible, Attorney Says (Correct)

A Denver attorney should be permitted to deduct about $303,000 spent on race car driving as an advertising expense for his litigation practice, he told a federal appeals court.

The IRS didn’t allow James Avery to deduct his racing-related costs from his taxes after concluding that the money was spent as a hobby, not as an ordinary business expense. The US Tax Court sustained that position in February 2023, writing that Avery’s practice operated “almost exclusively in Colorado,” while his racing activities were held in the Midwest and East Coast.

The US Court of Appeals for the Tenth Circuit should ...