Can anyone explain the $70,000 loss on taxes for owning a horse?

[hedgehog]

I realized last night, $70,000 is way more than our total net take home pay!

[pnwmom]

1. Total guess: they enter the horse into competitions with prizes? And some years

the horse wins and other years he doesn't. So the horse could be seen as a potential moneymaker, especially down the road, with stud fees.

As I said, this is purely a guess!

[gordianot]

2. I feed two stray cats had them nuetered one is feral was not an easy task.

I would like to take off at least $1.50 from my taxes for an estimated $300.00 in expenses this year.

[Igel]

3. Are your cats a business that you reasonable expect to make you money?

That business may be showing them or breeding them. Or you might buy a $20k kitten in hopes of raising it and being able to sell it at $35k, only to have the bottom fall out of the cat market without its landing on all four feet.

Are your cats covered by some sort of loophole that Congress passed to encourage a socially or societally beneficial goal (real or perceived)? Perhaps you have "seeing eye cats"? Or you use them for classroom purposes, so your public school teacher exemption can cover them and you can deduct the cost of taking care of them from your gross income?

Then, sorry, no.

Now, if you start entering them into shows or using them in your business--models for an advertising campaign, training them to do tricks to entice people into your shop, then, well, sure. They're a reasonable expectation that they'll make you money. Expenses for them can be taken off your gross income.

It's an income tax, and the bulk of taxes collected are for earned or investment income or, conversely, expenses in order to increase earned or investment income or losses to assets that lost value instead of producing income.

[FSogol]

7. "bottom fall out of the cat market without its landing on all four feet" - LOL

[gordianot]

8. I am providing a neighborhood service in the vermin they catch.

Surely worth at least $1.50. Rmoney does make me snarky.

[Fresh_Start]

4. whats even more amazing is it was a passive loss

I can't take a passive loss or realized loss on my home but they can take a passive loss on a horse.
Just not fair

[magical thyme]

5. 1%ers wrap their hobbies inside of profitable businesses

(not sure of the legal entity that works. maybe subsidiary. maybe something else).

So they avoid the need to show a profit at the hobby, while reducing their taxes on the profitable business.

We had family friends when I was a kid who became 1%ers. They got into racing and had a string of racehorses that provided losses for their successful plumbing business, to reduce their taxes.

bottom line is that Rafalca is the property of a business entity (say subsidiary) that will never probably make a profit (unless they are able to sell her to another 1%er for a mint after the Olympics), but Rafalca's costs are expenses to the business entity that owns her subsidiary.

[RebelOne]

6. I have owned 3 horses. Wish I could have deducted them from my taxes. n/t

[HopeHoops]

9. My understanding is that it is an aggriculutural rule for maintenance and feeding costs.

Using it for show horses is like claiming my cat as a dependent.