What does everyone know about this?

I waded through that mess, getting audited in 1999. The tore me up, but since I had H&R file it they paid off for me, eventually. If you have a main source of income, like working full time for Joe's Bait Shop, the IRS will give you fits trying to claim fishing expenses. In that case they consider it a hobby, an elective expense. It's no different that making bird houses as a hobby, making $1,000 selling them. It's taxable income. If you are a full time guide or full time pro tournament angler, you can do it, but have to keep good records like actual mileage and keep all receipts. You must separate recreational from business fishing. They will "assume" a high percentage of recreational by comparing actual dates of tournaments to 365 days a year. Rascals. You have to be careful to send in quarterly payments. They arbitrarily estimated I made $100K a year more than just from my gov-mint job. I had to "prove" I didn't, all because I didn't send in quarterlies. I paid the penalty anyway.

Extreme example: You fish the Classic in 2008 and win 1 million. Congratulations. Your direct expenses to get there total $50,000. Your taxable income is $950,000. They get $97,653.00 plus 35% of the amount over 336,550 and the state comes after theirs. Welcome to the high roller world.

Typical example: You win a total of $4,000 in 2007, expenses $5,000 including boat payments. Unless you are 100% a full time pro you can't claim that $1,000 loss. Your HOBBY cost you, but you had income from it. You pay tax on the $4,000, less a "reasonable" share of the expenses deducting the assumed recreational share, MAYBE. It depends on the attitude of the auditor sitting at YOUR dining room table, drinking YOUR cokes. You better butter her up. "Care for a ribeye steak off that grill?" They won't let you claim home payments where your "office" is. If a pro you get to claim a percentage of the house according to square feet 100% devoted to your business. A HOBBY room is not exempt.

Keep good records of ALL recreational trips as well as tournament trips. Most of those receipts will be shoved back to you, but at least you can reduce their ASSUMED recreational percentage with a log day by day. Make an entry each day whether you fished or not. PROVE you were not fishing 365 days a year. They accepted my log.

Or, don't raise the red flag submitting expenses.

They came back in 2001 even though I quit guiding 4 years earlier. It's a HASSLE. Before filing it consult the IRS. They'll set you straight. Or, use a tax service that guarantees their service and agrees in writing to pay any discrepancies, interest, and penalties.

Jim