Originally Posted by Dreamcatcher Arabians
Hobby Farms are no longer deductible in any way, the IRS closed those loopholes a while ago. Now in order to have deductions you have to be in business, for real trying to make a go of it, and keep really detailed records or you will get nailed hard.
This is completely WRONG, I just looked up the current tax code, The way I described it is 100% correct. Your hobby expenses can be deducted but only so much as you have hobby income.
Cut an paste from tax code,
The IRS presumes that an activity is carried on for profit if it makes a profit during at least three of the last five tax years, including the current year — at least two of the last seven years for activities that consist primarily of breeding, showing, training or racing horses. If an activity is not for profit, losses from that activity may not be used to offset other income. An activity produces a loss when related expenses exceed income. The limit on not-for-profit losses applies to individuals, partnerships, estates, trusts, and S corporations. It does not apply to corporations other than S corporations.
Deductions for hobby activities are claimed as itemized deductions on Schedule A (Form 1040). T
So you can't use hobby deductions to offset OTHER income, but you do use it to offset hobby income.
Like I said you can deduct the horse expense, but only and a big only if you have horse income and then only up to the amount of that income. If you spent 2000 on horses but only earned 1000 you only have a 1000 deduction,
I used to tournament bass fish, I kept track of all my expenses, I couldnt deduct any of them unless I won a tournament. SOme of those had a 10,000 pay out so I wouldt want my winnings eaten up in taxes. But if I didnt win I had zero deductions. Make since ?
The next two posters that run horse business are different. They are a business trying to make a living on horses, as such those expenses are business deductions. A completely different setup than personal deductions.