20) Two recent cases, both dealing with the common hobby loss
from horse-related activities, illustrate the court's methods for assessing the taxpayer's QuickBooks records and how the use to which those records are put can produce opposite results.
If the activity is not engaged in for profit, it is subject to the hobby loss
rules in Sec.
Not surprisingly, the primary use of the hobby loss
Conversely, the hobby loss
rules act to prevent the expensing of what otherwise would be personal expenses disguised as "valid" business expenses, thereby causing significant losses of revenue to the Treasury.
The test instrument was based on the facts found in a 1988 Tax Court case (Kimbrough, 55 TCM 730) focusing on the hobby loss
Aggregating activities to avoid the hobby loss
Equinomics 101 instructs horse owners how to minimalize hobby loss
The Tax Court disallowed an IRS auditor's deductions for breeding greyhounds as a hobby loss
The court held that they were an integrated activity, given their organizational and economic interrelationships, and that the horse activity was therefore not a hobby loss
unearned income, hobby loss
rules, preferential rates for capital gains, and the antiquated and punitive $3,000a-year capital loss limitation.
Proper grouping may help a taxpayer avoid the application of the hobby loss
In one recent case, however, the Tax Court accepted that two seemingly dissimilar undertakings could be treated as a single activity for purposes of the section 183 hobby loss