Are you ready for some football? This Sunday's Super Bowl is a true American tradition and annually ranks as the most popular sporting event in the country. So, aside from the parties, the ads and shouting at the TV for three hours, what does this mean to you, the taxpayer? Let's look at some of the tax consequences of the activities around the Super Bowl.
Any money you make on the Super Bowl is taxable. First, there's income from the sale of sports memorabilia. Whether you're selling it from a tailgate or on the streets of New Orleans, anything you receive in return is considered taxable income and must be reported on your tax return. Whether or not that income is reported as self-employment income subject to all your expenses, or hobby income with allowed expenses limited to your income only, depends on your individual circumstances.
Second, there's gambling. Did you know the Super Bowl is the biggest gambling day of the year? Gambling income is taxable. Yes, the IRS requires gambling income to be reported on your tax return. What about gambling losses? They are deductible, but they are only deductible as an itemized deduction, and they are limited to your losses. If you win $500 and spend $1,000 on lottery tickets, you must report the $500 as income on your tax return. You can only claim $500 of your losses, and that can only be claimed if you itemize deductions.
If you're throwing a party for the Super Bowl, there is a possibility that your party may have deductible components. How would it qualify? You must be gathering for the purpose of discussing business and you must discuss business during the meeting. If this happens, you may deduct a portion of the food and drink and possibly the supplies as a business expense. Make sure you keep good records that include the receipts, a list of those involved in the business meeting and the nature of the business meeting. It is a good idea to gather this information as you set things up and at the beginning of your get together so you have all the necessary information when you need it.
If you're lucky enough to be going to the game and you purchased tickets for yourself and an individual you are doing business with, or you would like to do business with, you may be able to deduct all or part of the cost of the tickets. Remember to keep the receipts, the individual's name and the nature of your business; if you aren't attending the game with your business associates, you may not be able to deduct your expenses.
Also, did you know that New Orleans has outlawed ticket scalping on the street and in person? "So what?" you say. Well, all income -- even the illegal income you receive from ticket scalping -- is taxable. And, unless you're in it as a business, the income is hobby income. This means it is treated like gambling income and losses. The income is reported on your tax return and the expenses, up to your income only, are reported as an itemized deduction.
The Super Bowl is America's premier sporting event, watched by millions with millions more having some activity surrounding it. In a way, the Super Bowl is similar to a tax return - everyone is going to be involved with it at some point and in some way. From going to the game, hosting parties and other activity, be sure you have fun and understand if there are any tax implications -- maybe even a tax deduction or two as well.