Tax Resources

Other than just taking my taxes and horse spreadsheets to an accountant, is there any publication on how to do your taxes for the horses you own?

[Scav]

You are paying taxes on ALL your wagers?

You should only be paying taxes on at 'signers' and all that should be written off as a loss.

[tanner12oz]

ummmm i think hes an owner wanting to know how to write off his horses.....not wagers

[Thoroughbred Fan]

Everyone I know who has horses formed an LLC. Then all you do is send your financial stuff to your accountant and he would produce a K-1. You use that on Schedule C, I believe.

-TF

[Holland Hacker]

Originally Posted by citycat

Other than just taking my taxes and horse spreadsheets to an accountant, is there any publication on how to do your taxes for the horses you own?

I'm assuming you're new to the business of owning a horse. In order to be deductible in the long run you must prove to the service ("IRS") that it is a business and not a hobby, difficult to do with out running it like a true business. There is a test that could that there is a "Profit motive" a business and that is the activity must show a profit in 2 out of 7 years for a horse business. If you can prove that there is in fact a profit motive than you have to prove that it is a business that you materially participate and not subject to the passive activity rules. This basically means that you are activily involed in the business (making decisions) not just an investor.

Once you meet both of those tests you should be able to deduct your loss on the horse racing business.

There is a great book by the American Horse Council that pretty much explains all of this in detail. I think it is called the horse owners tax guide or something like that.

As far as whether to form a partnership / LLC / Corporation that is all based upon the corporate and personal asset protection desired. This will dictate what type of tax return is filed for the activity.


The last bit of advice I would give is make sure you use a qualified professional that has an understanding of the horse racing game and the specific tax rules for the industry. I would use a CPA not just a tax preparer or HR Block, this can be a complicated area.

In spirit of full disclosure I am a CPA and have a Masters Degree in taxation. But do not have the time to prepare tax returns.

Good luck and if you have any additional questions feel free to send me a PM.

[Thunder Gulch]

Do like we did on our partnership investments, involve a partner that is also a CPA. He set up a LLC for free and does the tax return in about ten minutes for our four horses.