- Ag Docket
The petitioners, a married couple, operated a concrete business but also got involved in breeding and racing horses. The court determined that they were entitled to the presumption that they were operating the horse activity for a profit in accordance with I.R.C. Sec. 183 based on an analysis of all of the nine factors set forth in the regulations. They did keep business records of the horse activity, had a business plan (although it was unwritten), conducted the horse activity comparable to horsing activities conducted by other persons, undertook efforts to improve profitability, and generally conducted the activity in a manner indicating it was a legitimate business intended to turn a profit. The court also noted that the assets were likely to appreciate in value significantly. Certain factors did predominate in the government's favor, such as many years of losses that were used to offset income from other activities, and the high level of pleasure the petitioners derived from the activity. However, the factors predominating in the government's favor were insufficient to overcome the other factors in the petitioners' favor. Annuzzi v. Comr., T.C. Memo. 2014-233.
CALT does not provide legal advice. Any information provided on this website is not intended to be a substitute for legal services from a competent professional. CALT's work is supported by fee-based seminars and generous private gifts. Any opinions, findings, conclusions or recommendations expressed in the material contained on this website do not necessarily reflect the views of Iowa State University.