2014 RULEBOOK UPDATES ARE READY
The FQHR is continually looking at the classes and taking suggestions from our membership and committees. Following are the rule changes for the 2014 year.
Download Your 2014 FQHR Rulebook Updates Here
World Round Up & Review Another Amazing Show Weekend.
What a fantastic event. The support by exhibitors, spectators, sponsors and volunteers was overwhelming. FQHR has really found its stride and all that participate, attend and support us should be very proud. We had well over 900 entries, making it a huge show weekend. Thank you to Bill and Vicki Austin for saving FQHR from the brink, Laci Jacobi for an excellent job in the office, Dan Feldman and Diann Vipond who did the announcing for both rings, and the committee for pulling it all together. There are so many people who step up to help and we appreciate all of you. We have a year to plan so if you have any suggestions for next year, please contact me: Susie Walton 5861 E. Rosebush Rd. Rosebush MI 48878. My first one is to replace the word "Review" with "Reunion" because after the first time you have been there, it really is more of a reunion than anything else. CLICK HERE and you will see the list of 2013 World Round-Up & Review Winners and Class-By-Class Results. Photos coming soon.
Credibility a Key Factor in Taxpayer’s Testimony
By John Alan Cohan, Attorney at Law
In Timothy Kuberski v. Commissioner of the IRS [T.C. Memo 2002-200] the Tax Court ruled that a Phoenix, Arizona physician's horse breeding and racing activity was not engaged in for profit even though the taxpayer developed a business plan and kept business records. The case appeared to hinge in part upon the judge's evaluation of the taxpayer's own testimony, which he found unpersuasive. The judge said that the taxpayer, while he apparently had business plans, did not use these plans to improve the profitability of his activity. The taxpayer testified that he made economic forecasts and otherwise conducted the activity in a businesslike manner, but the operation's 28-year loss history allowed the taxpayer to offset substantial income from his medical practice. Also, the taxpayer did not show that he had relied upon experts in conducting the activity.
The taxpayer believed that he could breed a better-than-average thoroughbred horse because of his medical background and his understanding of physiology and statistical analysis. He is a licensed trainer as well as a certified horse appraiser. He had taken annual classes on taxes, business, shoeing horses, veterinary problems, animal husbandry, and sales preparation. He had written several articles for the thoroughbred horse industry, including one explaining the dosage system, a horse breeding theory, and others on various equine medical problems.
The taxpayer claimed that he kept detailed and well thought out business plans, maintained business account records with yearly profit and loss statements, filed stallion reports and reports of all broodmares and registered all foals with the Jockey Club, used a bookkeeping service, used business stationery and a business checking account, made a yearly assessment of the market, culled nonproductive mares or poorly marketable horses, made an economic forecast of each horse's productivity, and tracked the annual cost of getting each mare and foal to the thoroughbred sales. However, the judge said that the taxpayer's arguments “appear to have been copied from the tax guides for horse owners that [were] presented at trial and have little support from the evidence.”
Also, the judge said the taxpayer’s testimony “was generally vague and focused on the nature of the Arizona thoroughbred industry, rather than on the manner in which he conducted the breeding and racing operations. Petitioner alluded to one instance in which he consulted a nutritionist to eliminate a condition called epiphycytis. Petitioner’s testimony was uncorroborated by witnesses or documents.”
The judge said that even though there were adequate business records the taxpayer did not include analyses on why large losses recurred over a long period and whether any possibility of recouping them existed. The cumulative loss of the taxpayer over the years was about $888,000. In this case the years at issue were well beyond the startup period.
The taxpayer claimed that his farmland appreciated in value over the years and must be considered when analyzing whether the requisite profit motive exists. However, he failed to provide a formal appraisal of the value of the land.
Finally, the judge said that the taxpayer's level of income permitted him to continue the horse activity without a profit. If he had regarded the activity as a business, he would have focused more on the financial aspects and ways to cut losses. The court said, “The magnitude of the activity’s losses in comparison with its revenues is an indication that the taxpayer did not have a profit motive.”
The trend is that a continue series of losses beyond the startup phase will require substantial documentary and expert evidence in order to convince the IRS that the activity should be treated as a business rather than a hobby.
[John Alan Cohan is a lawyer who has served the horse, farming and ranching industries since l98l. He can be reached at: (3l0) 278-0203, by e-mail at moc.loa@nahocnalanhoj">moc.loa@nahocnalanhoj, or you can see more at his website: www.johnalancohan.com.]
Lazy Rafter Quarter Horses
Tom & Shirley May are owners of Lazy Rafter Quarter Horses, located south of Hutchinson, KS on the family farm established in 1904. Read More
Just a note to let you know what a blessing it has been for Kaye to be able to participate in the foundation shows locally. She works so hard practicing and tells everyone how proud she is to be able to show her horse. Read More