Supporting Your Child’s Career
Investing in your child’s future can be exempt from taxes. Here’s how. A father owned a profitable real estate development business while his son was a successful motocross racer. The father decided to help his son with his career by using his company to sponsor his racing activity and in two years, paid $160,000 for motorcycles, equipment and other costs. The father’s company stopped the sponsorship when the young man turned pro.
According to the Tax Court, most of the $160,000 could be deducted as an expense because the company obtained new business connections, construction financing deals and other favorable advantages from its sponsorship.
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