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John Alan Cohan, Contributing Columnist

Mar 23, 2012
Sometimes a farm, livestock or horse activity may be closely connected to one’s principal occupation, with certain tax advantages. If two activities are treated as one, deductions and income from each activity can be aggregated in deciding whether the taxpayer has the requisite profit motive under the IRS hobby loss rule.
Dec 16, 2011
Wheat is an amazing crop…which is why we grow it in Oklahoma. Given the slightest opportunity, wheat responds very well under adverse conditions. In late October, the prospects for wheat pasture seemed all but lost with most wheat planted late and dry. It was noted, however, that with timely rains, a decent wheat crop could still develop.
Dec 9, 2011
Mr. and Mrs. Harold Kahla of Tomball, TX, were denied farm deductions of $2,658,774 for their cattle and deer ranches, even though Mr. Kahla was knowledgeable about livestock farming and was highly successful in other businesses. They owned 300 head of cattle.
Aug 26, 2011
Under the IRS hobby loss rule, if you have losses in connection with any farming activity, whether livestock, horses, or crops, the IRS may suspect that the activity is engaged in as a hobby rather than a business, particularly if there is a history of losses.
Nov 5, 2010
After about 30 years handling tax audits, appeals and U.S. Tax Court cases, it seems to me that the IRS is taking a more aggressive approach against people in various industriesincluding livestock and horse activities. If you are audited by the IRS and you have a history of losses with little or no profits, the following advice pertains to you.
Sep 10, 2010
Most of the problems with hobby loss audits involve people who have a history of losses with their ranch, farm or horse venture. The IRS tends to say that the activity is not conducted as a business, so that the tax losses are disallowed. This can be a substantial tax payment for quite a few taxpayers.
Aug 6, 2010
In hobby loss audits, the IRS sometimes views various types of ranching activities as a means of generating tax losses, rather than a profitoriented venture. That was the issue in the Tax Court case, Ralph Wesinger, Jr., v. Commissioner of Internal Revenue.
Mar 26, 2010
The accuracy and businesslike nature of records is something that the IRS has been scrutinizing more and more in recent years. The IRS expects all taxpayers to maintain canceled checks, invoices, credit card statements and similar items needed to substantiate amounts claimed as business deductions and to help prepare ones tax returns.
Feb 5, 2010
The American wind power industry grew substantially in 2009 and at this point, almost 2 percent of the countrys electricity is produced from wind turbines. Many of these turbines are on farm and ranch properties all over the country. I have received many inquiries from people who have been approached by wind turbine developers.
Dec 24, 2009
The Internal Revenue Service (IRS) has been cracking down on individuals and small businesses including farmers, ranchers and horse ownerswith increased tax audits and aggressive tactics to collect taxes. The tactics include an increased volume of audits, and more bank levies and liens on real property.
Aug 21, 2009
Most of tax law is in grey areas. For instance, reasonable people, including those within the IRS bureaucracy, will disagree on what constitutes an ordinary and necessary business expensea big area of tax deductions. Another area concerns whether litigation proceeds to compensate for damages to farm or ranch property constitute taxable income.
Jul 17, 2009
A tax case, Mullins v. U n i t e d States, decided in the U.S. District Court in Knoxville, TN, considered an individual who owned and operated a cattle-raising operation who claimed he was entitled to deduct losses over a period of years.
Jun 12, 2009
In a lengthy decision, the Tax Court recently underscored the difficulties taxpayers have in convincing the IRS that family-run farms are engaged in for profit. The case, Smith v. Commissioner, T.C. Memo 2007-368, ruled on two families limited partnerships, involving a cow and dairy farm, a cutting horse operation, and dog breeding.
Jun 5, 2009
Enforcement action by the Internal Revenue Service (IRS) has actually increased in recent months in the farming, horse and livestock fields, partly due to the need for the government to raise revenue, and partly due to an increase in taxpayers failing to file tax returns or failure to pay taxes owed.
Mar 6, 2009
The farming, livestock and horse industries are facing challenges in hard economic times. These industries serve the economic lifeblood of millions of Americans, not only owners, but related industries and services as well. Casualties and setbacks from economic forces are recurring problems making it difficult to make a profit on a consistent basis.
Feb 20, 2009
The IRS is focusing more on audits in the farming, livestock and horse industries in which taxpayers are claiming six figures or more in tax deductions. This often pertains to taxpayers who are employed full time in a profession and operate the farm or other activity on a parttime basis, often relying on managers and contract employees.
Jan 2, 2009
The Internal Revenue Service (IRS) raised a record of $48.7 billion in revenue in fiscal year 2006revenue generated from audits of individuals, small businesses and corporations. There are about 115,000 IRS employees. This translates into a significant net profit to the government.

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