Show horse investment, tax break?

Posted by admin
LoganDM asked:


I bought a show horse, basically as an investment. I bought it myself rather than forming an LLC but am reconsidering that. My question is, can I deduct losses on my taxes for things like feed, stabling, vet bills, and insurance? If not, what could I if I had formed an LLC, and can I transfer assets to the LLC if I create one now?

PETE
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This entry was posted on Sunday, December 28th, 2008 at 7:52 pm and is filed under United States. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

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3 Responses to “Show horse investment, tax break?”

  1. FREDDY Says:
    December 28th, 2008 at 10:56 pm

    PARKER

    Oh, right, it’s an investment. And putting the horse in an LLC is going to magically give you tax breaks.

    The IRS is going to call this a hobby. Expenses can only be deducted up to the amount of income and you don’t have any.

  2. MARC Says:
    December 30th, 2008 at 5:18 am

    ELBERT

    An investment is an asset that you hold for its appreciation in value. If this is the case with your show horse, you cannot deduct any upkeep on the horse. If you sell your horse for more than you paid for it, you will pay capital gains tax and report the sale on Schedule D.

    If you bought the horse to show, you are not in a profit-making venture, but a hobby. If you had income from the shows, you would report that on Line 21 of Form 1040. Then you could deduct expenses up to your income on Schedule A up to the amount of your income.

    Forming an LLC is meaningless in your case and does not change the tax treatment.

  3. MOSES Says:
    January 2nd, 2009 at 10:01 am

    EARLE

    You can deduct the expenses if you have a legitimate business using the horse.