Gallegos's success in marketing insurance he writes :
Judge Holmes peppers the decision with horse puns. Describing Mr. Joseph Gallegos TCM 2021-25 taught me about a new sport - team roping. Overall there is nothing very instructive here. Lew Taishoff covered the decision with Forget The Hat - No Cattle. But we do not want to deny some recognition of those entrepreneurial skills. And growing timber is different from harvesting and logging it. Whatley's old business had nothing to do with cattle at all. Sheepdog Farms is primarily a cattle farm.
#PASSIVE ACTIVITY AUDIT GUIDE FULL#
Nonetheless, Judge Holmes went through the full nine factor drill. The score was 8-0-1. Judge Holmes gave him a break on the fourth factor. Judge Holmes notes:Ī cattle farm without cattle and a tree farm that doesn't yet harvest timber is highly likely to produce a bumper crop of losses. On its partnership return his operation Sheepdog Farm LLC describes itself as a farm and its principal product as cattle. There was also a lot of timber on the land. He was the founder, chairman, president, CEO and largest individual shareholder of Southern States bank. Whatley had some youthful agricultural experience, but found a career in banking more congenial. I would think they would have had to have started before it was Lee County, which was formed in 1866. Whatley's family had been farming and ranching in Lee County, Alabama for eleven generations.
Stephen Whaltey TCM 2021-11 is summed up in the Tax Notes headline to the text of the opinion - Banker's Cattle Farm With No Cattle Wasn't a Trade or Business. The opinion alludes to 183 noting that the factors are used to determine whether someone is gambling as a trade or business and that the petitioner had not addressed them. The opinion is mainly focused on the U.S.-Korea tax treaty. Park 136 TC 569 is about a South Korean executive who enjoys gambling when he visits the United States. to the extent of income from the activity) are subject to the 2% floor. No surprise there. There were two other opinions that mention 183, We'll address the latter first.Ĭarl Gregory TCM 2021-115 is a boat chartering case - a classic 183 activity. Judge Courtney Jones ruling on a motion for summary judgements holds that deductions allowed by 183 (i.e. Unless I missed something there were only three substantive 183 opinions this year. For a roundup of the last decade or so you might want to check out my Honest Objective Trumps Realistic Expectation – Why Tax Practitioners Should Be More Aggressive On Hobby Losses. The other important point the guide makes is that that Section 183 and the related regulations are close to unchanged from the early seventies. Therefore all of the nearly fifty years of case law remains relevant. Oddly the guide does not have much on the case law. So here is your opportunity to be ahead of the revenue agents. It is a presumption in favor of taxpayers and can't be used against them. There is a great deal of attention to the presumption outlined in Section 183(d). The presumption comes into play if there is profit in three out of five years or two out of seven in the case of horses. If somebody knows one thing about the hobby loss rules it is probably some sort of distorted version of the presumption. If you study the case law, you will find it has little practical significance. There is one very important observation about the presumption in the guide.Įxaminers cannot use IRC 183(d) as the reason for disallowing losses under IRC 183 even when the taxpayer fails to meet the presumption. The guide tells agents why their cases get pushed back by Appeals. Oddly, they seem to imply that is a bad thing. The guide encourages agents to talk directly to taxpayers rather than deal with representatives who don't have all the answers. So if you are a representative, make sure you have all the answers.
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