December first timer starters

[Valuist]

I've never heard of this angle before but I believe there is more urgency for first time starters in December, especially from the smaller barns. You can't write off expenses if there is no money earned in a given year. And as anyone who's owned horses will tell you, the unraced maidens have to eat just as much as their more accomplished brethren. This may not be an issue for the bigger owners, who have numerous runners making money to make up for the unraced stock. But the majority of owners are not Dubai sheikhs; just something to consider when you see a first timer late in the year, or a horse who is coming off a long layoff.

[sjk]

I have always written off all expenses as incurred whether they are racing or not. If you breed one or buy one at a yearling sale it is a long time before they run (and some never do).

[Valuist]

Sjk-

Did you own multiple horses when you did that? Let's say you have 2 horses that have raced and earned money and two more unraced horses. I realize you can lump the expenses of all 4 together and write it off against the earning of the 2 money earners, but what if you have one or two horses and they either didn't race or earn any money? What could you write their expenses off then? I don't see how you could write that off against employment income or investment income.

[sjk]

A sad fact of horse ownership is that in most years the expenses outweigh the revenues. There are IRS regs that tell you if you qualify to write off horse ownership expenses against other income (profit in 2 out of 7 years; active involvement in decisions etc. An accountant could give you a better list.) I think I have had runners in every year but I do not think my accountant has every told me that this would have tax implications.