But Still Profit-Motivated
Lowell G. Den Besten, 2019 T. C. Memo. 154, filed 11/25/19, leads Judge Paris through the nine (count ‘em, nine) factors of Reg. 1.183-2(b), the “goofy regulation” for his cutting horse activity, and beats IRS.
Word to a colleague: Mr. Reilly, here’s another one for ya.
Lowell was in the seed business, but loved cutting horses from boyhood’s earliest hour. He sold the seed business on the installment plan to his son, but the son defaulted on the notes. While son was letting the business go to seed (sorry, guys), Lowell was winning championships at cutting horse events, breeding, advertising, hiring help, giving all his records to trusty CPA of thirty years’ standing, downsizing the horse stuff while trying to rebuild seed business after son nearly cratered it, and showing how horses could increase in value by winning contests or breeding or both. Judge Paris has it all: Lowell gets six factors, IRS gets two, and one is neutral.
Lowell rescued the seed business and used the cutting horse losses to offset his seedy profits, but he didn’t have huge income to offset. Lowell can’t prove his NOL either, but his agricultural records pass muster for his deductible expenses.
“In the agricultural business it is not unusual to see no maintenance of records other than canceled checks and deposit slips. See Edge v. Commissioner, T.C. Memo. 1973-274, 1973 Tax Ct. Memo LEXIS 13, at *21 (declining to weigh against a farmer for his minimal recordkeeping system when it was no less stringent than what other farmers in the area used and worked for his particular operation). The records petitioner maintained were consistent with his business profit objective and enabled him to make educated business decisions about his cutting horse activity. This factor favors petitioner’s having a profit objective.” 2019 T. C. Memo. 154, at p. 23.
As usual, it’s all about the facts, but Lowell did a great job, pro se.
Taishoff Law 
[…] Lew Taishoff alerted me to this decision (I might not have gotten to it for a while. Nobody else follows the Tax Court with Mr. Taishoff’s intensity). His piece was titled Cutting Horses Gone To Seed. […]
LikeLike
[…] Lew Taishoff alerted me to this decision (I might not have gotten to it for a while. Nobody else follows the Tax Court with Mr. Taishoff’s intensity). His piece was titled Cutting Horses Gone To Seed. […]
LikeLike
[…] Lew Taishoff alerted me to this decision (I might not have gotten to it for a while. Nobody else follows the Tax Court with Mr. Taishoff’s intensity). His piece was titled Cutting Horses Gone To Seed. […]
LikeLike
[…] Lew Taishoff alerted me to this decision (I might not have gotten to it for a while. Nobody else follows the Tax Court with Mr. Taishoff’s intensity). His piece was titled Cutting Horses Gone To Seed. […]
LikeLike
[…] Lew Taishoff alerted me to this decision (I might not have gotten to it for a while. Nobody else follows the Tax Court with Mr. Taishoff’s intensity). His piece was titled Cutting Horses Gone To Seed. […]
LikeLike
[…] Lew Taishoff alerted me to this decision (I might not have gotten to it for a while. Nobody else follows the Tax Court with Mr. Taishoff’s intensity). His piece was titled Cutting Horses Gone To Seed. […]
LikeLike
[…] Lew Taishoff alerted me to this decision (I might not have gotten to it for a while. Nobody else follows the Tax Court with Mr. Taishoff’s intensity). His piece was titled Cutting Horses Gone To Seed. […]
LikeLike
[…] Lew Taishoff alerted me to this decision (I might not have gotten to it for a while. Nobody else follows the Tax Court with Mr. Taishoff’s intensity). His piece was titled Cutting Horses Gone To Seed. […]
LikeLike
[…] Lew Taishoff alerted me to this decision (I might not have gotten to it for a while. Nobody else follows the Tax Court with Mr. Taishoff’s intensity). His piece was titled Cutting Horses Gone To Seed. […]
LikeLike