The Tax Court denied more than $456,000 in horse business losses after finding that weak financial records, commingled funds, no credible profit plan, and eighteen years of losses outweighed the taxpayers’ expertise and substantial effort. Schumacher v. Commissioner shows what business owners must document to protect deductions under Section 183.

Good records can be the difference between winning and losing an IRS hobby loss audit. Learn which documents impressed the Tax Court, how successful taxpayers proved profit motive, and the records every business owner should maintain under IRC Section 183.

The IRS can deny business deductions if it determines an activity is a hobby rather than a business. Learn how taxpayers won and lost real Tax Court cases, what records impressed the court, and the mistakes that destroyed otherwise valid deductions under IRC Section 183.