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Washington Tax Alert April 18, 2007 (hobby loss; two activities)
Washington Tax Alert from Don Barnes, dbarnes@washingtontaxlaw.com The Tax Court issued a decision yesterday holding that a taxpayer was not subject to the hobby loss rules of IRC § 183 with regard to her activities competing in horse shows because the horse show activities were related to her interior design business. The taxpayer’s interior design business operated at a profit which exceeded the losses incurred with respect to the equestrian activities. Tracey L. Topping v. Commissioner, T.C. Memo. 2007-92. The taxpayer’s CPA reported her equestrian and interior design activities on separate Schedules C for the tax years in dispute. In subsequent taxable years, the CPA reported both activities on a single Schedule C. This case illustrates the importance of taking tax return positions consistent with your legal position. As the Tax Court commented in Topping, positions taken by a taxpayer on a tax return are treated as admissions and can be overcome only if the taxpayer can show by “cogent proof” that they are erroneous. Law Offices of Donald A. Barnes, PLLC The information you obtain at this site is not, nor is it intended to be, legal advice. You should consult an attorney for individual advice regarding your own situation. |  |         |