(06-19-2012 12:04 PM)Max Power Wrote: I have a problem with calling this a business (and more broadly, the tax code that allows him to get away with this). If this is a business, then I should be able to enter my dog in a talent show and write off the kibble and vet bills.
The tax code is blind to the type of investment. And, if your dog were a show dog and you formed a DBA or other business entity *YOU COULD* write it off.
The Olympics is not exactly 'a talent show'. Athletes write off training expenses all the time, so do sponsors. You don't think when a race car wrecks that gets written off?
Quote:The problem is this is in a legal gray area.
No, the problem is you *want* it to be a gray area. Is this horse for Romney's personal use? does he ride it in shows? Does he spend money on it and share in prize money / breeding fees... Sure sounds like a business to me..
This is not a pet horse that his kids ride, nice try.
Quote:The question for the IRS as I understand it is whether Mitt Romney honestly is doing this to make a profit (otherwise it's a hobby).
I would be more than willing to be if he is writing off 77K in losses, and employing a rider, that there is little question this is a financial investment. You can start business and invest in assets that personally interest you.
Quote:I suspect that this is a sham (and he basically admitted as much by saying it's therapeutic for his wife with MS)
What does it helping his wife deal with MS have anything to do with it being a sham? would you be happier if it was written off as a medical expense?
Quote:but the IRS probably decided that it's not worth the effort to take Romney to court and fight his army of tax lawyers over a $70,000 deduction to probe into his intentions.
Because they have no case.
Quote:IRS CODE:
The determination whether an activity is engaged in for profit is to be made by reference to objective standards, taking into account all of the facts and circumstances of each case. Although a reasonable expectation of profit is not required, the facts and circumstances must indicate that the taxpayer entered into the activity, or continued the activity, with the objective of making a profit. In determining whether such an objective exists, it may be sufficient that there is a small chance of making a large profit. Thus it may be found that an investor in a wildcat oil well who incurs very substantial expenditures is in the venture for profit even though the expectation of a profit might be considered unreasonable. In determining whether an activity is engaged in for profit, greater weight is given to objective facts than to the taxpayer's mere statement of his intent.
26 CFR § 1.183-2(a).
If my wife finds baking therapeutic... ohh how I wish... and we decide to start up a small catering business to both engage in something she likes, and bring in some extra money should I be able to deduct expenses related to it?
Romney's horse in in the Olympics and I have to assume that breeding fees are good for that caliber of horse. Clearly there is a Small Chance of making a large profit here.
This is about you hating on Romney, nothing about the act itself.