I resisted the urge this morning to make another pun; besides, Tony Nitti already did with his headline, “Former NFL Tough Guy Bill Romanowski Gets Laid Out By Tax Court.”
Yesterday, the Tax Court decided two cases related to horse breeding. I’ve covered horse activities in the past; all forms of activities related to race horses are expensive, and profits are hard to come by. In both cases, the petitioners looked at breeding horses as a means to lower taxes. That’s not a good way to get the Tax Court on your side. In both cases, the petitioners were left out in the cold without their losses. The Romanowskis did avoid the accuracy-related penalty; however, the other couple (the Pedersons) did not.
The moral is clear: If you really have a business and your is making money, you have a good shot of coming out of the Tax Court with your losses intact. If your goal in a business is losing money, your losses will likely evaporate in Tax Court. Tony Nitti and Joe Kristan have more.