Recently, The Treasury Inspector General For Tax Administration (TIGTA) reviewed methods used by the IRS to identify businesses that may not be operating for  profit, and recommended steps be taken to maximize the use of all relevant and available taxpayer information to better identify hobby losses. This is expected to  pose a significant issue for some horse businesses. 

The below is quoted from Highlights of Reference Number: 2016-30-031 to the Internal Revenue Service Commissioner for the Small Business/Self-Employed  Division.

The Treasury Inspector General For Tax Administration (TIGTA)'s review of a statistically valid sample of 100 returns determined that 88 percent showed an  indication that Schedule C businesses were not engaged in for profit. TIGTA estimates that 7,511 returns in the total sample population of taxpayers may have  inappropriately used hobby loss expenses to reduce taxes by as much as $70.9 million for Tax Year 2013.

TIGTA recommended that the IRS: 1) make use of SB/SE Division research capabilities to identify high-income individual returns with multiyear Schedule C losses  and other factors that indicate the taxpayer may not have a profit or capital gain motive for the activity and 2) emphasize the importance of required filing checks  in the preliminary determination of whether to pursue a hobby loss issue and provide tools to assist examiners in documenting their conclusion.  In response to  the report, IRS management agreed with the recommendations and plans to take corrective actions.

​READ THE FULL REPORT
​

Forbes.com published an article recently, stating that scammers posing as Internal Revenue Service (IRS) agents have managed to bilk tens of millions of dollars  from unsuspecting taxpayers. The scammers inform the residents that some personal information such as a social security number or personal financial  information needs to be verified in order for their tax returns to be processed. “Don’t be fooled,” says IRS Commissioner John Koskinen. “The IRS won’t be calling  you out of the blue asking you to verify your personal tax information or aggressively threatening you to make an immediate payment.”

READ THE FULL ARTICLE

On May 10th, 2016, Paul Husband, along with co-presenter Robert Misey, presented “Tax Issues in the Equine Industries”.  This practical two-hour online seminar  hosted by CCH focused on key domestic and international tax concepts and issues in the equine industry.

A sampling of topics covered in this program include:  Section 183 “Hobby Loss” challenges; Section 469 Passive Activity Losses; Depreciation; Section 179  Expensing of race horses and show horses; How to minimize your tax on equine activities abroad; and taxation on gains of sales of U.S. horse farms.
All professionals in public practice and in the equine industry will benefit from this helpful seminar, including business tax and finance executives, directors,  managers and staff; CPAs; enrolled agents; tax preparers and staff; accountants, attorneys and other financial advisors who work with and advise clients in the  equine industries that have domestic or international tax issues.

CCH, a Wolters Kluwer business, has been publishing materials on U.S. tax law and tax compliance since the inception of the modern U.S. federal income tax in  1913. Today, they are a leading provider of software solutions and local expertise that helps tax, accounting, and audit professionals research and navigate  complex regulations, comply with legislation, manage their businesses and advise clients with speed, accuracy and efficiency.