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Elite Veteran
Posts: 926
  
| For the first time in my life I actually sold a horse for significantly more than I paid for it. I deducted training and entry fees.
In looking on line, I see some folks have deducted vet expenses in the year of the sale.
Folks that buy and sell, what do you deduct? I don't have him as part of a business, this is a 'hobby' sale. |
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 Sorry I don't have any advice
Posts: 1975
Location: Sunnyland Florida |
I would strongly advise that you contact your CPA for accurate advice. If you don't have one, make an appointment with one to see if/what deductions you can take. If you're not claiming horses as a business, I'm not sure what deductions you can claim.
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Elite Veteran
Posts: 926
| I have a CPA and you can deduct some things. However, in reading about I got the impression that they could be deducted. I was just getting some thoughts from folks that may buy and sell all the time. |
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  Champ
Posts: 19623
 
Location: Peg-Leg Julia Grimm | Running your ranch or property as a business year after year is different than a one time sale. If you have a business, every dollar of what you spend in the fiscal year of the sale offsets the sale price. Not the profit. The sale price. So if your ranch has 15 horses and they cost $17K this year to feed, vet, farrier, etc... And the sale price of your horse is $15K, you will pay nothing in taxes on the sale. Especially if there is a purchase price to deduct from the sale price. However, like I said it is different with a hobby sale of a horse. You need to speak with a tax CPA who is familiar with ag business. I don't want to say the wrong thing and lead you astray. |
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 Elite Veteran
Posts: 972
Location: Texas! | I am curious as well, I will have this issue this year as well. Would you only be able deduct expenses/training for that year? |
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Married to a Louie Lover
Posts: 3303
| OregonBR - 2018-06-26 3:56 PM
Running your ranch or property as a business year after year is different than a one time sale. If you have a business, every dollar of what you spend in the fiscal year of the sale offsets the sale price. Not the profit. The sale price. So if your ranch has 15 horses and they cost $17K this year to feed, vet, farrier, etc... And the sale price of your horse is $15K, you will pay nothing in taxes on the sale. Especially if there is a purchase price to deduct from the sale price. However, like I said it is different with a hobby sale of a horse. You need to speak with a tax CPA who is familiar with ag business. I don't want to say the wrong thing and lead you astray.
That.
It really depends IMO on how you’ve been filing and how you will continue to file. At some point we all have to pay the piper. If you haven’t been filing as a farm or business and already deducting these types of expenses, suddenly deducting a lot large amount to offset a sale would in my mind throw a flag up and potentially trigger an audit.
We try to be consistent year over year with what we deduct and how we file. If we do have 1099’s from earnings we deduct just enough in entry fees and fuel to offset it.
A CPA with agricultural experience, better yet horse experience, is worth every penny you pay them to know how to handle these types of situations. |
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Champ
Posts: 19623
Location: Peg-Leg Julia Grimm | WYOracer - 2018-06-26 2:24 PM
I am curious as well, I will have this issue this year as well. Would you only be able deduct expenses/training for that year?
This is why I didn't want to say too much. I'm just not sure, because I've never done this. I've been filing my taxes as a business for a very long time.
I *think* if you sell a horse for quite a bit of money one time and you are considered a hobby, you can deduct the expenses for the entire time you owned THAT horse to the limit of the sale price of the horse. For instance, if in the above example you sell a horse for $15K. During the time you've owned him, it cost $xxx to feed, train, haul, enter, etc.. you may deduct dollar for dollar up to the sale price of the horse. That's the cost of getting him to the point that his value is $15K. But if you get audited you have to be able to prove what you claim. You also can't deduct the expenses of any other horse because you are not a business and the other horses aren't part of this sale. And here's the part I'm fuzzy on, I'm not sure if you can deduct the cost of buying the horse or not from the sale price. There's a lot of difference between an ongoing business and a hobby where you sold something. A Tax CPA will know what to tell you.
Edited by OregonBR 2018-06-27 10:11 AM
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Expert
Posts: 1314
Location: North Central Iowa Land of white frozen grass | So tell me the difference between buying a car and driving it for 5 years and selling it. You don't have to claim that as you never deducted it. A hobby horse should be no different. |
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IRS - horse sale, what do you deduct.