@JCAP25 wrote:
I'm retired with a small schedule C consulting business on the side. Using this as another business is again up to IRS interpretation. Not sure if it makes sense to try it as Schedule C.
Only you can answer, perhaps with an opinion from your own tax advisor.
The professional gambler analogy is not your friend. In the 2017 Tax Cut and Jobs Act, Congress changed the law on gambling expenses. The expenses of a professional gambler (travel, etc.) are only deductible up to the amount of their wins, in combination with wagering losses, and are not separately deductible as business expenses. https://www.irs.gov/pub/irs-wd/202111012.pdf
If you are not wagering on horse races, but trying to show skill in handicapping, then I think you are better off thinking about this like pro bowling or pro golf where you have to pay entry fees to enter a tournament, and may or may not win a prize based on skill rather than luck. But even then, it's only a business if you are engaged in the activity regularly and with a profit motive. Here are some other links that discuss the issue, although it's mostly restating the same concepts with slightly different wording. I would pay most attention to these three questions (and as always, seek your own professional advice):
Is the activity conducted like a business?
- Does the taxpayer maintain complete and accurate books and records?
- Does the taxpayer do the activity in the same way as similar profitable activities?
Does the taxpayer change their methods of operation to improve profitability?
- Does the taxpayer advertise or promote the activity?
- Does the taxpayer work to secure suppliers or products necessary for the activity?
What is the taxpayer or their advisors' expertise in the activity?
- Has the taxpayer, or their advisors, prepared for the activity by extensive study of its accepted business, economic, and scientific practices?
- Does the taxpayer follow the accepted business practices or advice of experts when they pursue the activity?
https://www.irs.gov/newsroom/hobby-or-business-heres-what-to-know-about-that-side-hustle
https://www.irs.gov/newsroom/know-the-difference-between-a-hobby-and-a-business
https://turbotax.intuit.com/tax-tips/small-business-taxes/when-the-irs-classifies-your-business-as-a...
https://www.taxpayeradvocate.irs.gov/news/tax-tips/hobby-vs-business-income/2025/01/
