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November 29, 2005

Mr. Steven Jacobs
Accounting Branch Chief
Division of Corporation Finance
United States Securities and Exchange Commission
Washington, D.C, 20549

Re:   Interactive Motorsports and Entertainment Corp.
      Form 10-KSB for the year ended December 31, 2004
      File No. 000-30771

Dear Mr. Jacobs,

I am in receipt of your letter dated October 25, 2005. I have once again
authorized David Smith of our company to prepare the company's response to your
inquiries in the space below.

Question:

     1.   We note your  response to comment 1 in your letters dated July 6, 2005
          and  October  25,  2005.  As  indicated  in  Exhibit  E of EOTF  01-9,
          consideration  given by a vendor to a  customer  may take a variety of
          forms including equity instruments of the vendor. Example 3 in Exhibit
          B and  Exhibit D provide  examples  of the  accounting  treatment  for
          consideration in the form of equity instruments.  Paragraph 13 of EITF
          00-21  prescribes  that  any  separate  unit of  accounting  which  is
          required to be recorded at fair value under GAAP should be recorded at
          fair  value  with  the  remainder  of  the  arrangement  consideration
          allocated  to  the  other  units  of  accounting  in  accordance  with
          paragraph 12 of EITF 00-21.  Accordingly,  please summarize the impact
          on your historical  financial  statements if you had applied EITF 01-9
          and  paragraph 13 of EITF 00-21 to the common stock  warrants  thereby
          reducing the amount  attributable to your management service agreement
          and  simulators  prior to any  relative  fair value  allocation  under
          paragraph 12.

Response

          The impact for the year  ending  December  31, 2004 would be to reduce
          revenue and net income by $127,271, resulting in revenue of $6,944,563
          and a net loss of $118,402  for the twelve month  period.  The balance
          sheet  would  also  be  impacted,  with  Additional  Paid  in  Capital
          increasing by $135,185,  Retained Earnings decreasing by $127,271, and
          Liabilities decreasing by $7,914.

          For the three month period  ending  March 31,  2005,  the impact would
          reduce  revenue  and net  income by $7,550  resulting  in  revenue  of
          $1,667,884  and a net loss of $46,276 for the three month period.  The
          balance sheet would also be impacted,  with Additional Paid in Capital
          decreasing by $8,110,  Retained  Earnings  increasing  by $7,550,  and
          Liabilities increasing by $560.
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          There  would be no impact for the three month  period  ending June 30,
          2005  since the final  transaction  with  Race Car  Simulation  Corp.,
          completed in April,  2005,  was recorded  with the warrants  valued at
          their full value.

Question:

     2.   We read your  response to comments 3 and 2 in your letters  dated July
          6, 2005 and October 25,  2005,  respectively,  and continue to believe
          that  you  have  not  demonstrated  how  you  meet  the  criteria  for
          entity-specific  or  VSOE of  fair  value.  We  understand  that  your
          historical cost of providing maintenance services would be a component
          of the  consideration  to establishing  the standalone  price for your
          management service agreement;  however,  you have not demonstrated why
          you  believe  this  price will be  accepted  in the  marketplace  on a
          standalone  basis.  Since your  management  service  agreement  is not
          currently  being sold  separately,  please  support how you determined
          that your historical cost to maintain your existing simulator fleet is
          equal to the fair  value of your  management  service  agreement  to a
          third  party,   which  includes  other  deliverables  in  addition  to
          maintenance  services.  Please also tell us how you determined that it
          is probable that this price,  which is limited to the historical  cost
          for only some of the services in your  management  service  agreement,
          will not change before the separate  introduction of this service into
          the market place. Lastly, please explain to us when and if you plan to
          introduce  your  management  service  agreement  into the  market on a
          standalone basis.

     3.   If you  consider  your  performance  obligation  under the  management
          service agreement to be inconsequential or perfunctory, please explain
          to us how you considered each of the factors in SAB Topic  13(A)(3)(c)
          in reaching this conclusion.

Response to Comment 2 and 3

          We read  Comment  2,  and do not  understand  how we have  not met the
          criteria  for entity  specific or VSOE of fair value.  Paragraph 16 of
          EITF 00-21, with reference to SOP 97-2, states that VSOE of fair value
          is limited to: (a) the price of the  deliverable  when it is regularly
          sold on a standalone  basis,  or (b) if the  deliverable has yet to be
          sold  separately,  the price  established  by  management  having  the
          relevant   authority  (it  must  be  probable  that  the  price,  once
          established,  will not change before the separate  introduction of the
          deliverable into the marketplace).  As we have stated previously,  the
          management of the Company, having the relevant authority,  established
          the price of the management service  agreements.  The Company believes
          it  receives  a fair  return  from the sale of its  simulators  to its
          customers,  and its customers are the sole prospects for engaging in a
          management service agreement. With this in mind, and given that it has
          the relevant authority,  management has chosen to price the management
          service  agreement  in such a way that it covers the cost the  Company
          believes it will bear for providing the maintenance  services entailed
          in the agreement. EITF 00-21 does not require the Company to show that
          the price established would be accepted in the marketplace.

          Additionally, as you have alluded in comment 2, the management service
          agreement  does have the  potential  to require the company to provide
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          deliverables other than maintenance  services on the simulators,  such
          services to be  delivered  on an "as  needed"  basis.  These  services
          include  collection  services  and  relocation  services.  The Company
          believes  that  these "as  needed"  services  are  inconsequential  or
          perfunctory per the context in SAB Topic 13(A)(3)(c). These additional
          services are not essential to the functionality of the simulators, and
          our customer does not have the right of returning the simulators,  nor
          do they have the right to reject all other  services  performed  under
          the  management  service  agreement in the event the Company  fails to
          complete  these "as  needed"  services.  Furthermore,  the  skills and
          equipment required to complete most of the activities related to these
          services are readily available,  the cost and time required to perform
          these  services  has not  varied  significantly  for one  instance  to
          another,  and the cost to complete the "as needed" services  incumbent
          in the  agreement  are  insignificant  when  compared  to the  revenue
          associated with the management service agreement.

          Management   believes  it  will  sell  its  first  management  service
          agreement  on a stand alone basis  sometime in the first half of 2006,
          although  there can be no assurance.  Management is confident that the
          price  will not  change  before  the  management  service  agreement's
          introduction into the marketplace,  since it is management itself that
          would make that determination.

In closing,  the Company continues to believe that its recording of the December
31, 2004  transaction  not only conforms to GAAP, but also meets the standard of
fair  presentation  of our financial  statements  that we discussed in our prior
correspondence  with  you.  The  Company  strongly  believes  that if we were to
incorporate  the  treatment  of the December  31, 2004  transaction  as you have
suggested,  we would not be fairly  presenting the  transaction or its impact on
our financial  statements.  The interpretation of the individual  accounting and
financial  reporting  standards  that you have proposed would lead to misleading
financial statements and therefore preclude fair presentation.  We would then be
placed in the  precarious  position of having to consider  certifying  financial
statements that we feel the do not fairly present the financial condition of the
Company.   As  such,  we  once  again  ask  that  you  please   reconsider  your
interpretation  of EITF 00-21 and your  proposed  treatment  of the December 31,
2004 transaction.

                                     * * * *

Thank you in advance for your  assistance  in ensuring our  compliance  with the
applicable   disclosure   requirements   and  in  our  efforts  to  fulfill  our
responsibility  of  fair  presentation  of  our  financial  information  to  the
investment  community.  Please feel free to call me or David Smith if you should
have further  questions.  Our  corporate  office  number is (317)  295-3500.  My
extension is 107, and David's is 102.

Sincerely,

/s/ William R. Donaldson

William R. Donaldson
Chief Executive Officer and Chief Financial Officer

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