Horse Facts and Tips
|First Posted Dec 28, 2008|
Jul 25, 2010
Horse Business or HobbyBy Kristen M. Wilson
Regional Extension Horse Specialist
This article is posted with the permission of the author, Kristen M. Wilson
"According to the Internal Revenue Service (IRS), if your main objective is to make a profit, then you are considered a legitimate business.
UNIVERSITY PARK, Md. - Many people involved within the horse industry often do not view their small horse operation as a business. They are surprised to learn that you do not have to own a large facility or have several years of experience to be considered an equine business. According to the Internal Revenue Service (IRS), if your main objective is to make a profit, then you are considered a legitimate business. Since most hobbyists usually hold down another job, in which their significant income comes from, and often try to offset the costs of their own horse expenses, the IRS will not consider them a real business.
Hobbyist can deduct their expenses up to the amount of income that was earned. However, when a profit motive exists, equine operations are able to deduct expenses greater than the income of the business. Since the IRS will be looking to see if you are a real business, there are several things that you must consider. Below are some important tips to keep in mind when running an equine business:
Keeping the items listed above in mind is important when considering whether or not you are a real equine business. As long as you can show that you do intend to make a profit, keep accurate and up-to-date records, and show that you do have a vested interest within your equine business then you should have no problem showing the IRS that you are truly a business and not just a hobby."