IRS Properly Disallowed Deduction for Race Car Hobby Expenses

A Denver personal injury lawyer must face more than $550,000 in taxes and penalties after he tried to deduct his spending on a race car as a marketing expense for his law firm, the Tenth Circuit affirmed Monday.

The IRS reasonably determined that James William Avery’s race car driving was primarily a hobby, not in service of his business, and therefore couldn’t support his claimed deduction for ordinary businesses expenses under Schedule C, the US Court of Appeals for the Tenth Circuit said. Avery had appealed the US Tax Court’s ruling after it too found that he hadn’t established ...