Married Couple Suffers Losses - Essay Example

Comments (0) Cite this document
A married couple consisting of a business manager and a nurse bred horses for profit within Code Section 183. While the couple had their losses, records declared that taxpayers made a profit. …
Download full paperFile format: .doc, available for editing
GRAB THE BEST PAPER97.5% of users find it useful
Married Couple Suffers Losses
Read TextPreview

Extract of sample "Married Couple Suffers Losses"

Case Summary A married couple consisting of a business manager and a nurse bred horses for profit within Section 183. While the couple had their losses, records declared that taxpayers made a profit. Before the couple began horse breeding, they engaged in courses about horse breeding, and put together extensive business plans, which allowed them to conduct the horse breeding in a proper businesslike approach. Furthermore, the husband had a strong background in business practices and the wife holds a degree in horse management. All of these aspects enabled the couple to be rightfully qualified for horse breeding. The respondent of the case noted inadequacies in the petitioners’ Federal incomes taxes for 2005 and 2006 in the amounts of $46,504 and $34,500, respectively. As such, a trial was held on March 3, 2011, in St. Paul, Minnesota to determine whether or not the petitioners’ horse breeding enterprise was considered to be for profit. When the petition was filed, the petitioners, Mark and Patti Blackwell, lived in Minnesota. Mark Blackwell has an MBA degree and thirty years of experience in business management. After working as a motocross racer and instructor, he founded a motocross drivers’ school. Since then, Mark has had an astounding career as the manager and senior officer for motorcycle, snowmobile, ATV, and personal watercraft manufacturing companies. At these jobs, Mark worked over forty hours a week. Patti holds a college degree in nursing. She did not work between 2000-2002, though she was involved in horse breeding, but picked up thirty hours a week in 2003 as a rehabilitation nurse counselor, working out of the family residence. In 1993, the petitioners bought their first horse, and many after until 2000. They studied numerous horse magazines, especially those concerning horse management, breeding, and bloodlines. They also attended numerous national horse shows. It was in the mid-1990s that they formed an interest in purchasing, breeding, and training horses. To aid herself in the proper management of horse breeding as an activity, Patti enrolled in the Equine Industry Management degree program at the University of Minnesota, where she learned how to manage horses as a business, as well as the economic aspects of breeding and training. Patti and Mark also attended horse training classes and conversed with horsemen on many occasions. In 1991, Mark and Patti set out to create a detailed business plan in regard to horse purchasing, breeding, training, showing, and sale of reining horses. The business plan declared that Patti would be the barn and breeding manager, taking responsibility for health, care, nutrition, and the training of the horses, while Mark would be in charge of the business and marketing aspects. The business plan also estimated losses for 2000 and 2001 at a total of $31,000, but averaged profits from 2002-2005 with a total of $152,000. Starting in 2000, the petitioners operated their horse ranch, Fresh Horses Farm, on their family property in Delano, Minnesota. During the years in question, Patti and Mark did not hire anybody to manage their horse business, but opted to do so on their own, including training and medical. To manage the monetary aspects of the horse business, the Blackwells opened a back account under the name of FHF and used BarnPro, a software program that records FHF income and expenses. In 2006, the petitioners ceased reining horses and began cutting horses, since cutting horses were in higher demand in the horse industry. Furthermore, they started selling some of their horses as long yearlings so they would not have to pay the expenses involved in keeping the horses longer. Out of the fifteen horses that were purchased between 1998 and 2008, only eleven were sold, and were done so at a loss. Of the remaining four, three were sold at a minimal profit, and one died, resulting in an insurance payment to the petitioners. Between the years of 1999 and 2008, the petitioners obtained and sold an additional twenty-one horses, which they received by means of breeding with outside horses. The foals, after being raised and trained, were later sold. When the unexpected death of one of the more prized horses came about in 2007, the petitioners faced a drastic setback to the plans of profitable breeding. When 2009 came around, the petitioners came to the conclusion that their business was not sustainable, thus terminating their horse breeding business. On the petitioners’ Federal income tax returns dating from 2003 to 2009, the petitioners attached a Profit or Loss From Business for, where they reported gross income, total expenses, net operating losses, and gain from the sales of business property in relation to the FHF business. When audited for 2005 and 2006, the respondent concluded that the petitioners’ FHF business was not eligible to be an activity engaged in for profit, thus not allowing deductions for the reported business expenses. This decision was based on section 183a and b, which states that an activity to be considered as ‘engaged in for profit,’ the activity must be executed by the taxpayer with an honest profit objective. The manner in which the activity of horse breeding was carried on was looked into, and it was noted that the petitioners carried on their activity in a completely businesslike fashion. Prior to their horse breeding business, the petitioners were not recreational horse owners. When they considered starting their business, they took necessary steps to secure the knowledge to run a successful and profitable horse breeding business. The petitioners kept records of income and expenses and, when they determined that the business was no longer profitable, terminated it. The education and experience that went into tending to a horse breeding business by the petitioners was intense enough for the petitioners to have a horse breeding business for profit. Furthermore, the time, effort, and financial resources that went into the business were not suggestive of a hobby, but rather of a for-profit activity. Even though Patti held a lifelong interest in horses, there is nothing to suggest that the horse breeding business was done out of personal pleasure, but with the hopes of making a profit. Given the above information, as well as the fact that the income did not exceed the expenses, it has been determined that the horse breeding business hold a profit objective. Read More
Cite this document
  • APA
  • MLA
(“Married Couple Suffers Losses Essay Example | Topics and Well Written Essays - 750 words”, n.d.)
Married Couple Suffers Losses Essay Example | Topics and Well Written Essays - 750 words. Retrieved from
(Married Couple Suffers Losses Essay Example | Topics and Well Written Essays - 750 Words)
Married Couple Suffers Losses Essay Example | Topics and Well Written Essays - 750 Words.
“Married Couple Suffers Losses Essay Example | Topics and Well Written Essays - 750 Words”, n.d.
  • Cited: 0 times
Comments (0)
Click to create a comment or rate a document

CHECK THESE SAMPLES OF Married Couple Suffers Losses

Job Losses to predict hourly production at store level. The portability of this system at LPB is a herculean task but not an impossible one. First the database needs to be updated to incorporate all the new products and information. Some historical data would need to be gathered for creating real time predictive models for the new products. A study would be required to be conducted to understand the interaction of the new products with the old ones. For example, production of bread should be higher in outlets that are also selling sandwiches. New systems would be required to be installed at the LPB outlets. The full system integration would take at least a year’s time or more. Essence of Randy’s explanation of the losses after...
5 Pages(1250 words)Case Study

Relating the social exchange theory to increasing divorce rates

...research in this regard have suggested that education has a positive association with the risk of divorce (qtd. by Lamb, 198). Many more immediate causative factors of divorce have been identified as well. These comprise of “frequent arguments, repeated expressions of negative affect, domestic violence, infidelity, and low levels of emotional support, commitment, love and trust between spouses (qtd. by Lamb, 198). In all these explanations on divorce, a common factor has been that, it is the losses and injuries (mental, physical, financial, social etc.) that one partner suffers, result in divorce. So all these causes can be directly linked to social exchange theory. It can be seen that it is the cost and...
7 Pages(1750 words)Essay

Married Life

...instead of studies. Thus, a sound source of income is a big goal of all unmarried men. Meanwhile, they celebrate their freedom in any way they feel like. Usually, parents become lenient with their sons as they grow up and give them room to do things their own way and discover themselves. So there is usually no one to criticize an unmarried man. Marriage offers numerous benefits that include mental and physical satisfaction (Stutzer and Frey, 2003, p. 328). A marriage is essentially a process (Manion and Manion, 2001, p. 12) in which an individual has to do certain things on daily basis without any break until the end of life. In the capacity of a husband and a father, a married man needs to earn bread for the family....
2 Pages(500 words)Essay

Same-Sex Couple Families

...? Same-Sex Couple Families This paper reviews the article d “Same-Sex Couples' Kids Less Likely to Have Private Health Insurance: Study” by Amy Norton, drawing few noteworthy inferences regarding the stressors inhibiting the confidence level of same-sex couples to raise their children. Accordingly, the paper critically evaluates the narrated facts in the article to obtain a thoughtful understanding to the problem exhibited throughout the discussion. Summary The article titled “Same-Sex Couples' Kids Less Likely to Have Private Health Insurance: Study” by Amy Norton made an attempt to depict about the challenges faced by Same-Sex Couple Families in today’s...
3 Pages(750 words)Article

Cross married

...from their own knowledge of judgment in every learning activity from the family. A family member married outside their race. For example, in the movie "Guess who coming for dinner", marrying from another race is a threat to the family. This may bring about more family tradition or upper class family. This results to race differences that make families to slowly lose their traditional value. The community is supposed to be supporting this but this is not the case since human beings are jealousy, greedy for power and fame. Therefore, if something is unusual in the community of friend, then it could be an opportunity for one to judge other than to gain respect for their own. New couples...
3 Pages(750 words)Essay

Couple Therapy

...Phuong Ta of the English 101 December 8, 2005 Couple Therapy America is known to have the highest divorce rate in the world and the primary reason is because many of these couples fail to communicate. As stated by Rowan John in 2004, communication gap is the reason why men and women constantly fight. Hence, they find it difficult to come up with an amicable solution. Communication gap is defined as lack of proper communication thus leading to a misunderstanding and responding negatively. My personal experience proves the above point. For example, when I was involved in a relationship, I had differences with my partner and we indulged in arguments and shouted at each other. We tried to come up with a lot...
7 Pages(1750 words)Essay

American Auto Manufacturers Losses

...). Source: St Clair, 1996 Ford is also on decline and recently it suffered huge losses, resulting in closing down many 14 plants and cutting down 30 thousand jobs. Ford is also expected to take one billion dollar from pre-tax charges in 2006 to do cost sweeping of its plants (Gordon, 2006).. It is also expected to take charges of $250 million in 2006 for its hourly staff and write off the value of plants and equipment clearly proves that Ford is going down the road. Even though Ford mentioned that it is looking forward to work on trucks in US, in present circumstances, it is mere wishful thinking. Similarly Delphi, which was US biggest auto Parts Company, went bankrupt in 2005, which added more to the...
10 Pages(2500 words)Essay

Gays couple should have the same right as married couples

...Gay Couples: A Controversy Gay couple or marriage is a relationship that has been established between two people of similar sex or gender. Most of the people of our society are in the favor of the equal rights in terms of status, accommodation, values, jobs and housing and so on. But, whenever there arises a question of the equality of the gay couples to those of married couples, the people turn around and take it as an offense. This behavior of the people about gay couples is due to a lot of misconceptions about the idea of homosexuality and its reality. I intend to target the wider population against equal opportunities and rights of...
1 Pages(250 words)Essay

A couple inerview

...A COUPLE’S/FAMILY INTERVIEW A Couple’s Interview The s of the couples are Joseph and Samantha, and their children are Joy, Tomand Bill who are 16 years-old, 12 years-old, and 10 years-old respectively. Joseph is 38 years-old while Samantha is 29 years-old. Joy is the first born, followed by Tom, and Bill is the last-born. Joseph is a professional accountant whereas his wife is an elementary school teacher. Joy is in high school while Tom is in junior high school, and Bill is in elementary school. Both Joseph and Samantha are university graduates. Joseph is the head of this family and is responsible for paying the mortgage, children’s school fees, medical insurance, automobile fuel bill,...
2 Pages(500 words)Essay

Capital Gains and Losses

...Capital gains and losses Introduction For many years, the United s capital gains and losses have continued to be plagued by many tax issues. Mutual funds are characterized by many unfavorable tax rules. First, there are inefficiencies where capital losses are deducted, and capital gains realized on trades within mutual funds. Earnest & Young (2011) argues that the United States has one of the most complex tax systems in the world. In the United States, there is no value-added tax or stamp duty imposition. However, every person and organization is subject to income taxation. As a rule, income must be reported, and taxes calculated and paid. Other than inventory items, companies may end up...
8 Pages(2000 words)Research Paper
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.

Let us find you another Essay on topic Married Couple Suffers Losses for FREE!

Contact Us