LTR Blog

American Horse Council Tax Bulletin – April 2016

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The following post in an excerpt from the American Horse Council’s Tax Bulletin.

Circuit Court Affirms Lower Court Finding Horse Activity Not a Business for Profit

By Thomas A. Davis, Esq., Davis & Harman LLP, Washington, DC

The taxpayers, wife and late husband, bred Tennessee walking horses on their farm in Tennessee. They incorporated the horse-breeding operation as LSA, Inc. and claimed substantial losses as deductions from LSA on their personal tax returns. (The husband died in a fire at their residence in January of 2003.)  The IRS determined that the horse-breeding operation was not an activity engaged in for profit and therefore assessed taxes and penalties against taxpayers.

Tax Court Finds Horse Training Activity Not Engaged in for Profit

By Thomas A. Davis, Esq., Davis & Harman LLP, Washington, DC

During the taxable years in issue, 2010 and 2011, the taxpayer, Linda Kaiser, operated a financial consulting and insurance business from her home called “Kaiser Consulting/Insurance Sales.” The taxpayer also conducted a horse training activity known as “The Forty Carrot Wisdom Co.” Previously, she had operated a small business, worked in real estate and insurance, and was a sales manager at a multinational financial services company.

Attorneys’ Fees and Other Costs in Tax Cases: Opportunities Exist for Taxpayers to be Reimbursed Their Costs
By Douglas P. Romaine, Esq., Stoll Keenon Ogden, PLLC, Lexington, KY
To date myself, I remember when a rate of $100 per hour for an attorney was a big deal.  Today it is not unusual to find hourly professional fees in major metropolitan areas have broached $1,000 per hour and beyond.  This article is not intended to examine the vagaries of hourly rates or their steady march up the scale but to make the observation that in the federal tax system where taxpayers generally bear the burden to prove that the determination of the IRS is not correct, it is often an expensive proposition for a taxpayer to contest an assessment.

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