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Converting from Gas To Methanol

Considerations for converting from gas to methanol for motorsports:

Methanol is corrosive.  Fuel systems need to be upgraded to corrosion inhibitive components not necessary in fuel systems for gas.

Methanol requires approximately twice the amount of fuel for the same power level as gas.  Fuel pumps and jetting need to be upgraded for the higher volume.

Methanol has a higher heat of vaporization.  That together with the increased volume can condense the inlet air, increasing the weight of air into the engine.  That together with the proper air/fuel ratio will usually increase engine power.  A power increase as high as 10% is reported by several racers who converted to methanol.

Methanol cooling throughout the intake system of a drag racing engine may eliminate the need for a cooling system that would otherwise be needed for gas.

Methanol is widely available throughout regions where racing is common.

Methanol absorbs moister.  For long term storage, it should be kept in sealed metal containers.  Methanol in plastic containers may get contaminated from humidity from long term storage.  Plastic at the microscopic level is porous and will let moisture in.

Methanol is poisonous in all forms.  It should be handled with protective clothing and eye protection.

More info in our book: 5000 Horsepower on Methanol.

Added Tax Tips for Motorsports Businesses

In our previous article about tax tips for motorsports businesses, a basic sole proprietorship was described.  It is a simple business form from a taxation standpoint.  Once business activities, income, and expenses become significant, a sole proprietorship may not be the best.  More indemnification and accounting flexibility may be needed.  An accounting example would be a business fiscal year for tax obligation reporting that is more in-line with your annual business fluctuations.  It may be different than your calendar year required for person income tax.

Corporation

Forming a corporation is the next step.  This can provide less business liability to the owner and with different accounting that sets up the business as a separate entity.

Various forms of corporations exist.   Information about various forms of corporations are in many books and info on the web.  Also, an attorney or accountant can be consulted to find the right corporation for your needs.

The following information is based on our experiences several years ago forming and running a C-corp. Continue reading

Tax Tips for Motorsports Business

They say nothing in life is certain except for death and taxes. In most parts of the world, taxes are part of life and part of running a motorsports business.  In the US, large expenses associated with running an engine building business are federal, state and local taxes.  This article will focus on the United States tax system, but similar ideas may be applicable to similar businesses in other countries as well.

One of the largest advantages to the US tax system is that profits are taxed after expenses are deducted.

This means that most expenses associated with building or running your business do not get taxed.  Smaller businesses may only require a sole proprietorship, but larger businesses may require a corporation.

Sole Proprietorship

For tax filing purposes, a sole proprietorship is the simplest form of business.  It can consist of a single person or a married couple.  Annual accounting is required, and the owner is liable for all taxes.   Profit should be shown for a minimum of two out of five years.  Retirement contributions and medical expenses are usually not part of business expenses and are done according to personal 1040 tax filing rules.

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