Contact UsI breed horses and have large losses this year and have been told to file a Schedule C with my large losses. On the other hand, another Advisor told me that this makes me a target for an IRS Audit which may be costlier. What advice would you give me?
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William Keats
Usually breeding of horses is reported on Form 1040, Schedule F (Farming). IRS guideline for breeding losses is 5 out of 7 years. Now, if you have filed past returns using Sch. F, I recommend that you still do. If you have been breeding horses for more than 7 years, and continually show losses, IRS can assume that this is a hobby, not a business. Losses are limited on Sch. F to $300,000. Excess losses create a NOL (net operating loss), which can be carried back 2 years and forward 20 years.
Reporting really large losses on Schedule C will attract attention of IRS, and probably would result in an audit.
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588 weeks ago
Reporting really large losses on Schedule C will attract attention of IRS, and probably would result in an audit.