Not equine treats, rather the story of Wesley E. Young and Janet S. Young. T. C. Memo. 2025-95, filed 9/22/25, who combined team roping (Wes) and pecan farming (Jan) with their home and a wedding venue to end up with massive deficiencies for two (count ’em, two) years at issue.

Mr. Peter Reilly, CPA, here’s another hobby loss case.

While the heavy-duty losses to offset the even heavier-duty income from the aircraft parts business Jan inherited from her late husband form the top line, the bottom line is want of records and the trappings of a business operation. Again and again ex-Ch J L. Paige (“Iron First”) Marvel is unable to tie in deductions, even when substantiated, with the years in which they were paid or incurred.

And there’s insufficient evidence to show that land appreciation was economically integrated with the rest of the horsing and pecaning to satisfy the special rule in the last two sentences of Treasury Regulation § 1.183-1(d)(1) pertaining to farming. Anyway, the land appreciation wasn’t the primary purpose; they testified they fell in love with the ranch.

The 43 (count ’em, 43) pages of ex-Ch J Iron Fist Marvel’s prose are too fact-specific for me to quote for the general reader,  but lead to the same conclusion: if you want to treat an activity as a profit-making activity, paper (or electrify) it as a business. Draft your business plan before you’re audited. Invest in bookkeeping software and use it. Don’t use your personal checking account for business and pleasure; get a separate business account even if you don’t get cash for opening it. Tie your trial testimony into your records; a great deal of trial testimony gets rough treatment because the documentary evidence, such as it is, contradicts or fails to support. If you’re relying at trial  on what you heard and did with other people, make sure they testify. And of course, merely retaining a CPA to prepare your returns from the materials you provide doesn’t prove good-faith reliance.

Note that events from out years are admissible when they show patterns and course of conduct.

While farmers do get some indulgence when it comes to recordkeeping, Wes and Jan are too hip to qualify (Jan has a BBA degree).