Farm Hobby Losses With Cattle and Horse Activities Edition

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IRS Tax Audit Manual for the Farm Hobby Losses With Cattle and Horse Activities: IRC Section 183

You Can Have The Information You Need To Save Yourself From An Embarrassing IRS Audit! Instantly download the actual Manual developed by the IRS to train its auditors in the Farm Hobby Losses With Cattle Operations And Horse Activities on IRC Section 183 Farm Hobby Losses has been developed to provide guidance to Revenue Agents and Tax Auditors in pursuing the application of IRC Section 183 with respect to horse activities and cattle operations.

Historically, IRC Section 183 has been a difficult issue for tax auditors to pursue. The development of the issue is a fact-gathering initiative. The application of IRC Section 183 is based upon the examiner’s understanding of the taxpayer’s industry, as well as the taxpayer’s mode of operation within the industry.

IRC Section 183 and the accompanying Treasury Regulations do not provide absolute definition, but serve to provide guidance in formulating the facts into a conclusion. Hazards of litigation have also been a deterrent toward the pursuit of IRC Section 183. As a result, auditors have been reluctant to allocate exam time. This has now changed.

IRS Tax Audit Manual for the Farm Hobby Losses With Cattle and Horse Activities will help to further develop the weaker areas within these cases and reduce the hazards of litigation. While IRC Section 183 has been referred to as the Hobby Loss section of the Internal Revenue Code, examiners should refrain from such terminology. The actual language of the Code refers to “Activities Not Engaged In For Profit.”

Some taxpayers resist this “hobby” terminology and the implications therein. For whatever reason taxpayers have engaged in these activities, albeit for pleasure of a hobby or the tax benefits derived, these activities were not engaged in for the sake of deriving a profit.

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The Internal Revenue Service Auditor has been instructed to use this manual during all phases of an examination where the provisions of IRC Section 183 may be applicable. The purpose of this training manual is to:

  • Provide background information about Farm Hobby Losses With Cattle Operations And Horse Activities
  • Identify frequent and/or unique issues
  • Provide examination techniques
  • Discuss use of applicable law and court cases
  • Identify current trends, unique business practices and forms of operation
  • Conduct an examination consistent with other market segment examinations throughout the Internal Revenue Service
Would you like to have INSTANT and UNLIMITED ACCESS to this Incredible Manual? 80 PAGES Chock-full of ALL of the information you need to survive an audit from the IRS in an easy to understand format! Download the IRS Tax Audit Manual for the Farm Hobby Losses With Cattle Operations And Horse Activities Industry TODAY!

IRS Tax Audit Manual for the Farm Hobby Losses With Cattle Operations And Horse Activities Edition: IRC Section 183


  • Introduction v
  • Statement of Purpose v
  • Objectives vi
  • Chapter 1
    • Market Segment Definition and Overview 1-1
    • Purpose 1-1
    • Definition 1-1
    • Background 1-1
    • Current Status 1-2
    • Horse Activities 1-2
    • Cattle Operations 1-8
    • Books and Records 1-9
    • Future Outlook 1-11
    • Resources 1-11
  • Chapter 2
    • Issues 2-1
    • Purpose 2-1
    • Issues 2-1
    • Pre-Examination Analysis 2-1
    • Review of Tax Return 2-1
    • Reporting of Schedule C or Schedule F 2-2
    • History of Losses 2-2
    • Large, Unusual, or Questionable Items 2-3
    • Gross Receipts 2-4
    • Other Substantial Income Sources 2-4
    • Factor 1: The Manner in Which the
    • Taxpayer Carries on the Activity 2-5
    • Factor 2: The Expertise of the Taxpayer or
    • His or Her advisors 2-8
    • Factor 3: The Time and Effort Expended by
    • the Taxpayer in Carrying on the Activity 2-10
    • Factor 4: The Expectations That the Assets
    • Used in the Activity May Appreciate in Value 2-11
    • Factor 5: The Success of the Taxpayer in
    • Carrying on Other Similar or Dissimilar Activities 2-13
    • Factor 6: The Taxpayer’s History of Income or Losses
    • With Respect to the Activity 2-14
    • Factor 7: The Amount of Occasional Profits, if Any,
    • Which Are Earned 2-15
    • Factor 8: The Financial Status of the Taxpayer 2-17
    • Factor 9: The Elements of Personal
    • Pleasure or Recreation 2-18
    • Compliance Issues 2-19
    • Underreporting of Income 2-20
    • Employment Taxes 2-20
    • IRP Document Compliance 2-20
    • Misplaced Income Sources 2-21
  • Chapter 3
    • Examination Techniques 3-1
    • Purpose 3-1
    • Information Document Request (IDR) 3-1
    • Issue Identification 3-2
    • Using Specialists and Other Resources 3-2
    • Initial Interview 3-3
    • Exam Location and Business Tour 3-4
    • Tour of Operation 3-4
    • Unique Indirect Methods 3-9
    • Books and Records 3-9
    • Sources of Information 3-9
    • Other 3-10
  • Chapter 4
    • Supporting Law 4-1
    • Purpose 4-1
    • Internal Revenue Code 4-1
    • Treasury Regulations 4-1
    • Activity Not Engaged in for Profit 4-2
    • Case Law 4-5
    • Coordinated Issue Paper 4-5
  • Appendix A-1
  • Appendix A
    • Calculating the Examination Adjustments
    • Per IRC section 183 A-3
  • Appendix B
    • Alternative Positions A-7
  • Appendix C
    • General Suspense and IRC section 183(e) Procedures A-9
  • Appendix D
    • Sample Initial Interview A-11
  • Appendix E
    • Tax Savings Benefit Analysis A-21
  • Glossary G-1
Don’t forget – The IRS Tax Audit Manual for Farm Hobby Losses With Cattle and Horse Activities is tax deductible as a business expense!