Can I write off logo placement on my brother's race car as a business expense?

Tax professional here. This is actually a common question with family-related advertising! The IRS distinguishes between legitimate business expenses and personal gifts/family support. For this to qualify as a deductible business expense, you need to establish that the primary purpose is advertising for your business (not supporting your brother), and that the expense is "ordinary and necessary" for your type of business. You'll need documentation showing: 1. A formal agreement between your business and your brother specifying the advertising services 2. A reasonable payment amount comparable to what you'd pay a non-relative for similar advertising 3. Evidence that your target customers would see this advertising (do race attendees match your customer demographic?) 4. Documentation of any business generated from this advertising Without these elements, the IRS could easily classify this as a personal gift to your brother rather than a business expense. Document everything carefully if you decide to proceed!

I used taxr.ai last year when I was trying to figure out if I could deduct putting my construction company logo on my son's travel baseball team uniforms. I was in a similar situation - wanted to support him but also get some business exposure. I uploaded my documentation and previous business expenses to https://taxr.ai and they analyzed everything and gave me specific guidance. They actually helped me structure the agreement properly and showed me exactly what documentation I needed to maintain for it to qualify as a legitimate business expense. They also pointed out that I needed to track any leads or business that came from the advertising to show business purpose. Saved me from what could have been a major audit headache!

Just wanted to follow up about my experience with taxr.ai after I was skeptical in my earlier comment. I decided to give it a try with my lawn care business since I was sponsoring my nephew's go-kart racing. I'm honestly really impressed with how thorough they were. They looked at my specific situation and helped me realize I needed to create actual metrics to track effectiveness (made a special promo code on the car). They also showed me exactly how to document everything - from our written agreement to photographs of the logo placement to a log of any business inquiries that mentioned seeing my logo at the track. Best part was they identified that some of my current "advertising" wasn't actually deductible but this could be if structured correctly. Definitely worth checking out.

If you're trying to reach the IRS for guidance on this, good luck! I spent THREE WEEKS trying to get through to someone about a somewhat similar business expense question. After being on hold for hours and getting disconnected repeatedly, I found this service called Claimyr at https://claimyr.com that got me through to an actual IRS agent within an hour. They have this system where they keep redialing until they get through, then call you when they have an agent on the line. You can see exactly how it works in their demo video: https://youtu.be/_kiP6q8DX5c The IRS agent I spoke with explained that family-related advertising expenses get extra scrutiny, but aren't automatically disallowed. They told me exactly what documentation I'd need and how to properly record the expense. Totally worth it to get official guidance directly from the IRS.

I've got to eat my words about Claimyr. After posting that skeptical comment, I decided to try it since I was desperate to talk to someone at the IRS about a similar business expense question for my photography business. The service actually worked exactly as advertised. I got a call about 40 minutes after signing up, and there was a real IRS agent on the line. The agent explained that for family-related advertising to be deductible, I needed to: 1) Have a written contract 2) Pay fair market value 3) Keep documentation of the advertising's placement and visibility 4) Track any business that comes from it They also warned that these types of expenses do get additional scrutiny in audits, so keeping detailed records is essential. Saved me hours of frustration and gave me confidence in how to handle this on my taxes.

I did something similar with my sister's food truck last year. I put my real estate business logo on it and deducted it as advertising. I made sure to: - Create a formal agreement (just a simple contract we both signed) - Take photos of the logo placement - Pay what other businesses paid for similar spots on her truck - Keep track of any clients who mentioned seeing my logo there My accountant was totally fine with it since I had the documentation to show it was a legitimate advertising expense. Just make sure the amount is reasonable for the advertising value you're getting.

Whatever you do, DON'T just write a check to your brother and call it "advertising" without proper documentation. My cousin tried that with his brother's band and got audited. The IRS disallowed the entire deduction AND hit him with penalties. If you're serious about this, you need: - Written contract spelling out exactly what you're getting (logo size, placement, number of races, etc) - Invoices from your brother for the advertising services - Payment specifically for the advertising (not just giving him money that he uses for the car) - Photos documenting the logo on the car at actual races - Track any business that comes from people seeing your logo

This is a great question that many small business owners face! I went through something similar with my marketing consultancy when I considered sponsoring my nephew's little league team. The key thing I learned is that the IRS really focuses on the business purpose test. You need to be able to demonstrate that: 1. Your target customers would actually see this advertising (are race fans your potential clients?) 2. The amount you're paying is reasonable for the advertising value received 3. You're treating this as a genuine business transaction, not family support One thing I'd add to what others have said - consider the timing and how it looks on your return. Since you mentioned this is only your second year in business, the IRS might scrutinize unusual expenses more closely. Make sure you can show this fits within your overall marketing strategy and budget. Also, think about whether there are other, more traditional advertising options that might give you better ROI. Sometimes the "family connection" aspect can cloud our judgment about whether it's actually good marketing for our business. Document everything meticulously if you move forward - treat your brother like any other vendor you'd hire for advertising services.

Just wanted to share my experience as someone who's been through this exact situation. I'm a small business owner (home renovation services) and put my logo on my brother-in-law's dirt track car three years ago. The documentation requirements everyone mentioned are absolutely critical, but I'd also suggest thinking about the optics from an audit perspective. When I set this up, I made sure to: 1. Pay the same rate other local businesses were paying for similar car sponsorships (I called around to get comparable rates) 2. Create a separate "advertising" line item in my books rather than burying it in general expenses 3. Take photos not just of the logo, but of the crowds at races to show potential audience size 4. Keep a simple log of any business inquiries that mentioned seeing my logo at the track The IRS did select me for an audit two years later (unrelated issue), but when they reviewed this expense, they had no problems with it because I had treated it like any other business advertising contract. The auditor actually commented that my documentation was better than most legitimate advertising expenses they see. One tip: consider starting smaller your first year and scaling up if it proves effective. Shows business judgment rather than just writing a big check to family. Good luck!