SecProbe.io

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      December 8, 2005

Mail Stop 4561

VIA U.S. MAIL AND FAX (317) 298-8924

Mr. William R. Donaldson
Chief Executive Officer and
   Chief Financial Officer
Interactive Motorsports and Entertainment Corp.
5624 West 73rd Street
Indianapolis, IN  46278

Re:	Interactive Motorsports and Entertainment Corp.
Form 10-K for the year ended December 31, 2004
      Filed March 29, 2005
      File No. 000-30771

Dear Mr. Donaldson:

      We have reviewed your response letter dated November 29,
2005
and have the following additional comments.  Feel free to call us
at
the telephone numbers listed at the end of this letter.

1. We read your response to comment 1.  Please restate your
historical financial statements to record the fair value of the
common stock warrants consistent with the guidance in EITF 01-9
and
paragraph 13 of EITF 00-21.

2. We read your response to comment 2 and continue to believe that
you have not demonstrated how you meet the criteria for entity-
specific or VSOE of fair value.  Specifically, the suggested
pricing
strategy for your management service agreement incorporates the
return provided on the sale of the related simulator which is not
consistent with the notion of objective evidence of fair value on
a
standalone basis.  As a result, the elements should not be
separated
under EITF 00-21 until evidence of fair value exists for the
management service agreement on a standalone basis.  Accordingly,
please restate your historical financial statements to account for
the sale of the simulators and management service agreement as a
single unit of accounting.

3. We understand that you changed your method of accounting for
the
sale of simulators during 2005 to that of the percentage of
completion method of accounting.    Please provide support for
your
conclusion that your contracts fall in the scope of SOP 81-1.  In
this regard please describe to us in sufficient detail (1)
activities
involved in performing services including the average duration of
the
contract, (2) buyer specifications, (3) legal rights of the buyer
and
seller as the services are provided, (4) acceptance provisions and
(5) rights of return.  Refer to paragraphs 11-16 and 21-22 of SOP
81-
1.

4. Notwithstanding our comment above, we note that you measure
progress-to-completion using a cost-to-cost approach under the
input
method.  Output methods, such as units-delivered, measure results
directly and are generally the best measure of progress toward
completion in circumstances in which reliable output measures can
be
established.  Please tell us what consideration you gave to using
an
output measure, such as units-delivered, in determining the
appropriate method to measure progress-to-completion.

5. Please show us how you account for revenues and costs in
accordance with SOP 81-1 for the duration of the contract period.

*  *  *  *

	You may contact Josh Forgione, at (202) 551-3431, or me, at
(202) 551-3403, if you have questions. Please respond to the
comments
included in this letter within 10 business days or tell us when
you
will provide us with a response.  Please file your response on
EDGAR.

								Sincerely,

      Steven Jacobs
      Accounting Branch Chief
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Mr. William R. Donaldson
Interactive Motorsports and Entertainment Corp.
December 8, 2005
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