Hello all,I am doing my taxes using Turbo Tax for the first time and I came across the "Other Miscellaneous Deductions" section where it says miscellaneous deductions might include "expenses for a hobby". It describes a hobby as "an activity that is deemed to not be carried out for a profit." It further states that this is determined by facts and circumstances such as "the manner in which the activity is engaged in, your expertise in the activity, the time and effort put into the activity, the expectation that they activity will generate income, your past success or failure at generating income with the activity, elements of personal pleasure or recreation associated with the activity." Here is my question, in 2000 I had two horses that I boarded at a local stable. I have one horse (Horse #1) for pleasure, he is retired from showing, however the farm owner does occasionally use him for riding lessons and gives me a slight reduction in my monthly board in exchange for the use of my horse. The other horse (Horse #2) was for sale and was sold in September of 2000. I spent a great deal of money on training, lessons, showing, and advertising for this horse. My question is, do any of my expenses qualify for a deduction as expenses for a hobby? Now that Horse #2 is sold I do not plan on showing and ride Horse #1 strictly for pleasure. If any of my expenses are deductible what is or isn't? In 2000 I paid monthly board, vet bills, blacksmith bills, show fees, lesson fees, trailering costs, advertising fees, training fees, and postage on sending videos to potential buyers. My overall expenses for both horses are more than what I made on the sale of Horse #2. I also had both horses in 1999 and am wondering about filing an amended return if my horse related expenses are deductible, is that possible?Thanks in advance for any help!
Hobby expenses are only deductible to the extent of hobby income.You need to first show hobby income to the line 21 of the Form 1040. Hobbies cannot generate a loss.The IRS will look closely at why you have these horses. If the reason for having the horses was personal then none of the expenses would be deductible because they are personal. Horse 2 could have some possibility getting some of those expenses deductible.
Hobby expenses are only deductible to the extent of hobby income.Your income is the gain from selling the second horse. Since your gain is less than your total expenses in 2000 you may deduct only the amount of the gain, as a miscellaneous deduction subject to the 2% of AGI deduction.
"If the reason for having the horses was personal then none of the expenses would be deductible because they are personal"WHAT?!?!?? Not PERSONAL??? Isn't the point of a hobby to be personal?? Otherwise it would just be a business, and therefore subject to the "I own a business" section. This still makes no sense!
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