Newtown, PA--Larry Rosenblum, President of The Equine Tax Group, today noted that the IRS
continues to audit horse businesses at a very high rate.
Rosenblum stated: ”The IRS has found that auditing persons with high incomes from other businesses who have losses in the horse business are very good audit targets The key issue IRS likes to raise in these cases is called section 183, or the activity not entered into for profit rules.
"The hobby loss issue is clear. There is a rule that you must earn a profit in two of seven years in an agricultural business, or otherwise demonstrate you are running things in a manner so as to try to make a profit to avoid being designated a hobby. Avoiding this fate requires some due diligence to maximize profitability. These can be outlined as (1) have a business plan with solid financial projections, (2) hire experts to help you run your business, (3) have good financial records, including a business checking account.
The above is not a guarantee but it goes a long way toward reducing your chances of losing an IRS audit in this area."
For further information contact the Equine Tax Group At 888-338-2999 or www.equinetaxgroup.com