Tax Advice

By John Wollenberg, JD, CPA, and Leonard C. Green, CPA, MBA Editor's Note: Chris McGrath's popular TDN series "Succession" about horse racing-industry businesses passed from one generation to the next sparked this column by Len Green and John Wollenberg. The odds are frightening that only 50% of family businesses that are successful are passed to the second generation. Only 10% are successfully passed on to the third generation. There are many reasons for this and volumes of material have been written on this subject. But few provide you with the...

Len Green, the founder of The Green Group, joined this week's TDN Writers' Room to share what breeders and owners can do before the close of the year to save money on taxes.

A donation of a horse to a tax-exempt organization can be mutually beneficial. The donor could potentially obtain an income tax deduction, and the organization receives a worthwhile asset. The horse itself also appreciates greener pastures. This article summarizes the guidelines for horse owners contemplating such a charitable contribution. Recipient Be sure that the donee organization qualifies as an eligible charity under the Internal Revenue Code and that your horse will be used by the organization to further its exempt purpose. You can ask to see the "IRS Determination Letter"...

Additional reporting from Jack Canaley Some will label the recent IRS Case Skolnick v. Commissioner as a win for the government since the court disallowed the deductibility of the losses and classified the operation as a hobby. However, we examined the case in great detail and learned some very valuable lessons that will benefit people in the horse business. The recent ruling, which ultimately was upheld upon appeal by the Third Circuit, provided some clarity and insight into the factors considered in determining the deductibility of losses generated by a...

by Andrew J. Mollica, Esq and Len Green, CPA What an industry! The recent, well-publicized ongoing legal sagas of both Ahmed Zayat and Ken Ramsey have brought issues surrounding owner-trainer financial relationships into clear focus. Yet, the truth is that no-pay or slow-paying owners probably have been a small, but existing part of racing since the game was invented. Despite its topical nature, the problem is not going away anytime soon, and the reason is simple: horse racing is a 21st-century industry that is based on an 18th-century business model....

In horse racing, the contest is not over until the horse crosses the finish line. The same is true with maximizing your tax deductions and minimizing your taxes. For those who think it is too late to save on your 2020 taxes, we are here to tell you, it is not! With over 40 years' experience saving our clients taxes along with our knowledge of the new tax laws, we are confident the following information will help you as you approach the 2020 home stretch and allow you to hit...

COVID-19 has changed the way we go about our daily lives. It has also increased the number of individuals who are self-employed and have no other employees, also known as independent contractors. The formal definition of an independent contractor is a person or entity contracted to perform work for, or provide services to another entity as a nonemployee (meaning that the employee is "at will" and not eligible for an employer's health or retirement benefits). The general rule is that an individual is an independent contractor if the payer has...

Last week, I was listening to the TDN Podcast. The Green Group Guest of the Week was the very successful trainer and four-time Eclipse winner Chad Brown. One of the panelists asked Chad if he was affected by economically by COVID-19, even though he had relationships with so many significant owners who might be able to weather the storm of uncertainty. Chad's response was that "all trainers are being affected, especially the smaller to midsize ones." That got me thinking. I have seen hundreds of articles and podcasts on the...

We are pleased to report we received a number of favorable responses to our first question and answer column. We also received several new questions which we are addressing at this time. Question #1: From a tax point of view, what should we do if the horses we bought to pinhook can now not be sold? Answer: As a result of the threat of COVID-19, many pinhookers are having second thoughts. Our normal transaction was to buy yearlings in 2019 for resale at the 2-year-old sales in March and April...