In Uncategorized on 12/22/2016 at 16:40

Judge Posner of USCA 7 is a tough critic of Tax Court. All y’all (I’m going to Houston next week, so I’m warming up) will remember the drubbing he gave poor Judge Wherry for wisecracking.

If not, see my blogpost “There Goes the Neighborhood,” 9/3/13.

But Judge Ruwe is a diligent student of Judge Posner’s prose, and quotes him in Cecilia M. Hylton, 2016 T. C. Memo. 234, filed 12/22/16.

Cecilia is another horse fancier, and Judge Ruwe has 38 pages of her horsey lore. And Cecilia even outdoes the inventive counsel for Raymond Price, III. Counsel asserted “… the receipt of cooled stallion semen at the Honda dealership as evidence that a horse activity is conducted at that dealership.” See my blogpost “More Horseplay,” 12/16/14.

On her way to losing $17 million on her horse operation while earning $89 million from her father’s real estate business, Cecilia shows her dedication to her deceased world champion stallion Flashy Zipper by having  “…a veterinarian remove his testicles and ship them to Colorado State University to harvest and freeze his semen.” 2016 T. C. Memo. 234, at pp. 12-13.

By now you’ve sussed out that this is another Section 183 hobbyhorse.

Judge Ruwe goes through the nine-part checklist, which Judge Posner calls “a goofy regulation,” namely, Reg. 1.183-2.

Finally,  Judge Ruwe breaks down and quotes Judge Posner.

“…the Tax Court would be better off if rather than wading through the nine factors it said simply that a business that is in an industry known to attract hobbyists (and horse racing is that business par excellence), and that loses large sums of money year after year that the owner of the business deducts from a very large income that he derives from other (and genuine) businesses or from trusts or other conventional sources of income, is presumptively a hobby, though before deciding for sure the court must listen to the owner’s protestations of business motive.” 2016 T. C. Memo. 234, at p. 31, footnote 11.

This tired-out old-time single-shingle lawyer-blogger couldn’t agree more, Judge Posner!

And the case Judge Ruwe refers to is Roberts v. Com’r, 820 F. 3d 247, at p. 254, reversing Judge Paris in part.

Tax Court just can’t catch a break when Judge Posner is on the case.

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