Romneys Have Tax Deduction With Olympic Hopes on Rafalca

[NNN0LHI]

http://www.bloomberg.com/news/2012-07-27/romneys-have-tax-deduction-with-olympic-hopes-on-rafalca.html

By Richard Rubin - Jul 26, 2012 11:01 PM CT .

Rafalca, a 15-year-old mare competing in dressage at the Olympics opening today in London, will be trying to add to the U.S. medal count and Republican presidential candidate Mitt Romney’s bottom line.

Romney’s wife, Ann, who calls horses her “passion in life,” has an investment in them, including Rafalca, valued at as much as $500,000. The couple’s tax returns classify Ann Romney’s pastime as a business that lost $77,731 in 2010, rather than a hobby, and as a passive investment instead of one they actively manage. Each of those decisions has tax consequences.

The Romneys’ tax deductions for their investment in Rafalca emphasize the distinction in the tax code between hobby horses and the horse business. Hobby expenses are harder to deduct than business expenses. It’s a difference the Internal Revenue Service tries to enforce and one that some horse owners try to cross when they see their care-and-feeding bills, said Dessa Bergquist, an accountant at Eide Bailly LLP in Golden, Colorado.

“Horses are interesting and a lot of people like horses,” said Bergquist, who specializes in equine tax issues. “So they sit there and they go, well, let me see if I can’t make a business out of this.”

[enough]

1. Gets confusing. Is the horse a business, a hobby, or therapy for her MS? (nt)

[tanyev]

2. Go shake your moneymaker, Rafalca! USA! USA! USA!!1!!

[C_U_L8R]

3. My dog does his business every day

maybe I should take a tax deduction like Mitt

[cap]

4. What year did Rmoney make money from this "business"?

You can only lose money on a business for five years before the IRS declares it a hobby.