Trade or Business

William R. Huff and Cathy Markey Huff, v. Comm’r, T.C. Memorandum 2021-140| December 21, 2021 | Urda, J. | Dkt. No. 22604-17.

Short Summary:  The main issue in this case is whether the taxpayers’ miniature donkey breeding activity was operated with the intent to make a profit under section I.R.C. 183 during the 2013-2014 period (the tax years).

William R. Huff (the taxpayer), a wealthy financier, engaged in the miniature donkey breeding business with the intention of supplementing the income of her daughter. The venture was carried under Ecotone, an LLC solely owned by the taxpayer and his wife. To engage in the donkey breeding activity he conducted extensive research, and acquired multiple donkeys with the intention of breeding newer ones under 25 inches tall. His business was located in a specified area of his farmland and the business kept separate books and records detailing the donkey purchases and sales. The taxpayer did not obtain a personal pleasure of the business because according to his own words, having the donkeys “it’s a lot of work” and the donkeys are “quite ugly” and look like a “gigantic hairball”.

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