Arabian Horse Breeders Fail To Prove Profit Motive

The United States Tax Court recently sustained the IRS’s disallowance of loss deductions a Louisiana couple claimed were attributable to their Arabian horse activities. The IRS had audited the couple for the years 2004-2009 and determined that they were not engaged in their Arabian horse activity with the requisite profit motive to be entitled to the business loss deductions they claimed. The IRS determined deficiencies in the couple’s federal income tax payments totaling around $100,000.