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E30
Level 1

Team Sponsorship

I am the coach or a Mountain Bike team and own an engineering business S-corp.

I regularly do rides with the team and my bike can be seen at races and practices by potential customers.

If I sponsor the team where they put my logo on their jerseys and I put my company name on my mountain bike, is it reasonable to write of things like the cost of my bike, gear, maintenance and the sponsorship money?

 

Thanks

1 Best answer

Accepted Solutions
GiseleD
Expert Alumni

Team Sponsorship

The sponsorship money can be deducted as a business expense, as you indicated that your business logo will be on the jerseys. This is advertising. Also, the cost to place the logo on your bike is deductible; it serves as advertising. However, your mountain bike itself, gear, and the maintenance costs of the bike are most likely not deductible business expenses.

 

First, you have to determine if these expenses are ordinary and necessary for your trade/line of work. Page three of IRS Publication 535 (Business Expenses) can help. A deductible business expense must be both ordinary and necessary.

 

Ordinary. An ordinary expense is an expense that is common and accepted in the taxpayer’s line of work.

Necessary. A necessary expense is an expense that is helpful and appropriate for work. An expense need not be required in order to be considered necessary. Facts and circumstances must be considered to determine whether an expense is ordinary and necessary. Even though an expense may be ordinary and necessary, the cost might not be deductible.

 

The bike, gear, and bike maintenance costs are most likely not ordinary and necessary expenses for an engineering business. Additionally, you cannot deduct personal expenses as business expenses. If you use the bike and gear for personal enjoyment (likely), these are personal expenses.  

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3 Replies
GiseleD
Expert Alumni

Team Sponsorship

The sponsorship money can be deducted as a business expense, as you indicated that your business logo will be on the jerseys. This is advertising. Also, the cost to place the logo on your bike is deductible; it serves as advertising. However, your mountain bike itself, gear, and the maintenance costs of the bike are most likely not deductible business expenses.

 

First, you have to determine if these expenses are ordinary and necessary for your trade/line of work. Page three of IRS Publication 535 (Business Expenses) can help. A deductible business expense must be both ordinary and necessary.

 

Ordinary. An ordinary expense is an expense that is common and accepted in the taxpayer’s line of work.

Necessary. A necessary expense is an expense that is helpful and appropriate for work. An expense need not be required in order to be considered necessary. Facts and circumstances must be considered to determine whether an expense is ordinary and necessary. Even though an expense may be ordinary and necessary, the cost might not be deductible.

 

The bike, gear, and bike maintenance costs are most likely not ordinary and necessary expenses for an engineering business. Additionally, you cannot deduct personal expenses as business expenses. If you use the bike and gear for personal enjoyment (likely), these are personal expenses.  

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"

View solution in original post

E30
Level 1

Team Sponsorship

Thanks for the info!

GiseleD
Expert Alumni

Team Sponsorship

My pleasure--best of luck in the races!

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