A federal judge recently ruled in favor of Center Ranch in a tax case, declaring that the Centerville, Texas-based cattle, hay and cutting horse operation was a for-profit business in spite of monetary losses. Owned by Finis Welch, the 8,700-acre ranch is home to Equi-Stat Elite $2 Million Sire Woody Be Tuff, whose progeny include […]
In a remarkable decision, the 7th Circuit Court of Appeals reversed a Tax Court opinion dealing with a Thoroughbred racehorse owner’s activities. The case, Roberts v. Commissioner, concluded that the taxpayer's horse racing activities were entered into for profit. The Court characterized the Tax Court decision as untenable, in that it in effect concluded that a business's start-up costs were not deductible business expenses and that every business starts as a hobby and becomes a business only when it achieves a certain level of profitability. The 7th Circuit opinion was an embarrassment not only for the Internal Revenue Service (IRS), but for the Tax Court judge in the case, Judge Elizabeth C. Paris.