Buy Pricey Tackle and Write It Off

Whether you’re a full-time bass pro or only fish for bucks on an occasional basis, you might be able to get a tax break from Uncle Sam on your expenses. 

By Colin Moore

Five hundred bucks for a bass-fishing outfit? For real? You bet; the days of high-dollar tackle are here to stay. Even if you can’t justify buying such luxuries, others can, as the notion of catching a big ol’ good ’un with a reel as smooth as a Rolex watch and a rod as nimble as a magic wand is universally appealing. How can those other guys afford the best stuff when you can’t?

Maybe they know something that you don’t. If you can convince the Internal Revenue Service (IRS) that you actually MAKE money fishing, you might be able to write off such equipment when you figure up your annual tax bill

Nobody graduates from high school or college and becomes a professional bass fishermen a week later. Most guys work into it gradually, taking time off from their regular jobs to fish part-time, and then switching over to the professional ranks once they’ve established their bona fides. Some make it; most don’t. Knowing this, the IRS makes allowances for persons who are trying to grow a business from scratch, and distinguishes between fishing for profit and fishing for fun. If you enter and win cash in various local, regional and national tournaments on a fairly regular basis, you’re eligible.

It really boils down to what your intent was when you got into tournament fishing, notes Philip York, a tax return preparer in Alexandria, La. If it’s for fun, then you’re out of luck. But if the fishing tackle you bought is a legitimate business expense for your tournament fishing, you can itemize it and deduct it on Schedule C. What you want to establish is that your fishing is a part-time business that you intend to make into a full-time business.

Under Section 183 of the federal tax code, an activity that results in profits three out of five years is qualified as a business, according to York. Any expenses, rods, reels, fishing line, motel stays, fuel and boat insurance, that the business owner accrues are deductible.

Some years you might have a real profit (earnings over and above claimed expenses) and sometimes you might show a loss, York said. The IRS looks at it over a five-year period. Under Section l83, if you’re in an activity that generates profits three out of those five years, but losses in the other two years, you can still get by with claiming those activities on a Schedule C or as Schedule A itemized miscellaneous deduction. Consult with your tax professional to insure the Section 183 requirements are followed.

Under Section 179 of the Internal Revenue Code, business assets up to $250,000 can be written off on Schedule C for the year that they are purchased. Depreciation of a boat or towing vehicle can be written off as well, but it’s not a simple process. The business owner, you, has to take into account how much time is spent using the boat and vehicle for business (i.e., winning cash in bass tournaments) and fishing for the heck of it.

“There is an annual percentage rate that you can write-off for depreciation on a boat, probably on a l0-year lifetime, if you’re using it every weekend in tournament fishing or if you can write it off under Section 179,” York said. “A lot depends on how serious your bass-fishing business is as reflected in your income from it. If you have a pickup truck and you use it to pull your boat, for example, your first-year depreciation could be $3,260 of the cost. If the truck has a loaded gross vehicle weight rating greater than 6,000 pounds, you are not subject to any caps; therefore, the first year write-off could be more. Here again, though, you’re not going to write off 100 percent of the truck unless you’re using it 100 percent of the time for your tournament business.”

There are other options available if you become a full-time pro, such as establishing your business as an LLC (limited liability company) or incorporating your bass tournament business, but when you’re just starting out, start slowly. Confer with your tax professional; rules change frequently.

York’s best advice is: Don’t get greedy. You might be able to deduct a lot of the cost of those expensive rods and reels that you’ve got your eye on, but you’ve got to prove that you used them to make money that will be shared with the federal government in the form of taxes. Otherwise, the IRS doesn’t care whether you use a cane pole or a gold-plated reel. If you try to deduct it, one of the things you’ll catch is a tax audit.