Tax planning and preparation
Tax planning and preparation by experts experienced in the equine industry is essential for the financial success of any horse operation – large or small. The use of qualified professionals weighs in favor of the business owner in making sound financial decisions, as well as, facing IRS challenges to the tax position of a horse operation. We assist the horse-business owner in navigating the complex tax code with knowledgeable planning and accurate preparation.
There are many areas of special importance to horse owners concerned with their activity being treated, and taxed, as a business by the IRS. Two examples are listed below.
Hobby Loss Provision - Establishing a Profit Motive
It is important to understand how the hobby loss provision operates. The IRS uses nine factors to determine whether or not the taxpayer entered into or continues an equine activity with the objective of making a profit. This determination has severe tax consequences. We analyze these factors as they relate to new and developing horse businesses and aide our clients in developing and implementing procedures and systems addressing potential areas of concern in establishing a profit motive.
Passive Activity Loss Rules – Time and Effort
IRS code section 469 defines passive activity as any activity which involves the conduct of any trade or business, and in which, the taxpayer does not materially participate.” If the IRS determines a horse owner does not to materially participate in the equine business, significant tax consequences result. We help our clients learn and understand the importance of material participation regulations in the financial success of their business.
If you are interested in learning more, please contact us by phone, mail or e-mail and ask for Terry.