Quote:
Originally Posted by AndyC
The thing gutted in the 80's was the ability to write off passive losses without having passive income. Essentially those are losses passed through to investors who put money up and have no say in the running of the business. People who owned horses as a business were not restricted from taking losses. The problem was that many of the businesses took on money partners who were not in the business and accordingly could not take the losses passed through to them. Without the ability to get an immediate tax benefit from horse ownership losses, the money quickly dried up.
The passive loss rule was/is very effective at closing a massive loophole for tax shelters. The problem for racing is that when horse ownership had to stand on its own with regard to economic feasibility it didn't really stand up. Not exactly a great place to put your money if you are looking for sustainable profits.
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There is a poster that belongs to that horse ownership group. So, if that horse had never made it to the track, all the money he put up would have just been lost, and he wouldn't have been able to write any of it off? Or, being that the horse has raced, let's say it wasn't nearly as successful as it has been. Our poster would only be able to write off losses no greater than what his share of the horse's winnings are?
If I'm understanding this correctly, having that tax law repealed would be much more advantageous to horse racing than the "signer" legislation we're tossing around right now. I can see how the passive write off law could be abused, it could almost be used as a "laundry", but for syndicate ownership groups to flourish, some kind of passive loss allowance seems necessary.
