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Friday, July 11,2014

Legally Speaking

Tax court case on cow and dairy farm activities

by John Alan Cohan - Contributing Columnist
In an important Tax Court case, J. Zane Smith of Earlville, NY, challenged the IRS’s determination that his cow and dairy activities were a hobby. The lengthy opinion also involved other issues, including his dog breeding activity and a cutting horse activity.

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Friday, April 11,2014

Legally Speaking

Tax treatment of casualty losses

by John Alan Cohan - Contributing Columnist
Last fall a freak early snowstorm killed thousands of livestock and horses in South Dakota. Ranchers suffered a tremendous monetary loss of prized livestock and horses. More recently in Kentucky, eight horses were killed in a fire, four of which were yearlings slated for the Keeneland September sale.

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Friday, February 7,2014

IRS Chief Counsel memo highlights Form 1099

by John Alan Cohan - Contributing Columnist
The IRS Office of Chief Counsel recently issued a memorandum concerning the use of IRS Form 1099 (also known as “information returns”). This form is important to taxpayers especially if you are audited in connection with horse activities, ranching or farming.

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Friday, January 17,2014

Legally Speaking

The IRS and business plans

by John Alan Cohan - Contributing Columnist
In recent years the IRS has ruled that a written business plan is important evidence which tends to prove that you are operating in a businesslike manner. The Tax Court has said that in hobby loss cases you should have “some type of plan” for the venture.

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Friday, November 8,2013

Beef Talk

Sending spayed heifers to the feedlot

by John Alan Cohan - Contributing Columnist
They just broke 2 pounds a day of average daily gain on grass and are heading to the feedlot at 940 pounds. The center had 102 yearling heifers last spring. After selecting 25 replacement heifers, 77 were spayed and sent to grass. Of the 25 replacement heifers, 19 were diagnosed as pregnant.

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Friday, September 6,2013

Legally Speaking

IRS manual reveals attitude toward industry

by John Alan Cohan - Contributing Columnist
The IRS Manual has a section in the Audit Technique Guide entitled “IRC Section 183: Farm Hobby Losses With Cattle Operations and Horse Activities.” The guide is intended for to alert IRS auditors to situations pertaining to the horse and cattle industries.

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Friday, May 10,2013

Legally Speaking

The IRS's misguided approach to "recoupment"

by John Alan Cohan - Contributing Columnist
For many people in the horse or livestock business, the operations have a history of losses, but the expectation is that future operations will be profitable. The IRS will want to see evidence that the taxpayer has taken steps to correct or abandon unprofitable strategies, and to demonstrates steps taken to improve operations.

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Friday, March 8,2013

Legally Speaking

by John Alan Cohan - Contributing Columnist
Some cases involve a combination of activities, such as Smith v. Commissioner, T.C. Memo 2007-368. This involved a cow and dairy farm, a cutting horse operation, and dog breeding. The court held that the cow and dairy farm was engaged in forprofit activities under the IRS hobby loss rules, but not the other activities.

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Friday, January 11,2013

Legally Speaking

Livestock industry concerned about important tax benefits

by John Alan Cohan - Contributing Columnist
Ever since the inception of income tax, all areas of farming have enjoyed generous tax benefits. Livestock owners are permitted to take depreciation deductions on their farm to offset gross income, as well as to deduct reasonable costs of operating a livestock breeding or activity from other income.

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Friday, November 9,2012

Legally Speaking

Livestock industry concerned about important tax benefits

by John Alan Cohan - Contributing Columnist
Ever since the inception of income tax, all areas of farming have enjoyed generous tax benefits. Livestock owners are permitted to take depreciation deductions on their farm to offset gross income, as well as to deduct reasonable costs of operating a livestock breeding or activity from other income.

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