APRIL/MAY/JUNE 2014 $2.50 INSIDE: WINNERS OF THE 2014 BREEDERS FESTIVAL ArizonaTHOROUGHBRED OFFICIAL PUBLICATION OF THE ARIZONA THOROUGHBRED BREEDERS’ ASSOCIATION G FAIKIR & J P ROCKER AWESOME STRETCH DUEL IN THE GENE FLEMING BREEDERS’ DERBY A Winning Combination Knowledgeable Staff l Training Official 5/8 mile Track Health Conscious l Swimming Irrigated Pastures Equineciser l Dedication and Patience Lay-Ups l Foaling l Large Paddocks Individual Stallion Turn-out Pasture Hidden Springs Ranch P.O. Box 68, 18701 Highway 89 Peeples Valley Yarnell, Az 85362 Phoenix: 602-381-8800 • Local: 928-427-9424 • Fax: 928-427-9525 E-Mail: [email protected] l Web: thehiddensprings.net 2 Arizona Thoroughbred | April/May/June TWO 18-HOLE CHAMPIONSHIP GOLF COURSES LIKE VEGAS USED TO BE 24 HOUR CASINO ACTION SPA WITH MINERAL POOLS KATHERINE’S FINE DINING 24 HOUR DINING TABLE GAMES SHOWROOM & LOUNGE ACTS CONVENTIONS & MEETINGS WINNING SLOTS RELAXING & BEAUTIFUL Arizona Thoroughbred | April/May/June 3 April/May/June • Issue II Contents New Tax Court Case Discusses Passive Loss Issue .................................5 OFFICERS President: Kevin Owens Arizona Stallion Stakes - Desert Wildcatter .............................................6 Vice-President: Dennis Miller Sec/Treasurer: Wende Macumber ATBA Membership Meeting & 2013 Awards .....................................8-18 DIRECTORS Arizona Breeders Festival 2014 ......................................................19-37 John Campo, III, Mike Chambers, Ron Chappell, Marvin Fleming, Shawn Haggstrom, William Matthews, Jan Joanne Dye Stakes - Aware ............................................................20-21 Osborn, Scott Rollins, Dr. Filippo Santoro, Lee Vaughn, Dave Williams and R. C. “Rink” Williams. Dwight Patterson Stakes - Red Zeus ...............................................22-23 ATBA ADMINISTRATIVE STAFF Sandra Hall Grand Canyon Handicap - Frisky Ricky ........................28-29 Executive Director: Dove Ward Arizona-Bred Registry: Berdette Felipe Ann Owens Distaff Handicap - Tempe ............................................30-31 Associate Editor: Dove Ward Advertising: A.T.B.A. Office Gene Fleming Breeders’ Derby - JP Rocker ....................................34-35 CONTRIBUTORS ATBA Sponsors ...................................................................................38 Bloodhorse Bloodstock Research Turf Paradise Seasonal Awards .......................................................38-39 Coady Photography Benoit Photography Legislative Report ................................................................................41 John Alan Cohan The Jockey Club Paula Prather Top Fortitude ...................................................................................... 42 equibase.com ATBA Spring Sale Stake - Brookerson ..................................................43 SUBSCRIPTIONS $15.00 annually domestic; $24.00 foreign Track Talk ...........................................................................................45 ©2014 by The Arizona Thoroughbred Breeders Association Robertino Diodoro ...............................................................................46 Incorporated P.O. Box 41774, Phoenix, Arizona 85080 Arizona-bred Winners .....................................................................49-50 Telephone: (602) 942-1310 • Fax: (602) 942-8225 ATBA offices are located at 1501 W. Bell Rd., Phoenix, AZ, 85023. ATBA Sale Winners .....................................................................51 & 53 The Arizona Thoroughbred is published quarterly (annually publishes a Stallion Registry) in Phoenix, Arizona by the Arizona Thoroughbred Breeders Association, a non-profit corporation, Tempe Handicap - Cavour ...................................................................54 dedicated to the production of better Arizona-Bred Thoroughbred horses for better Arizona Thoroughbred racing. Calendar/Advertising Index ..................................................................55 Opinions expressed in signed articles are those of the authors and do not necessarily reflect policies of the ATBA or this magazine. Publication of any material originating herein is expressly forbidden Anne Von Rosen Benefit Auction ....................................................56-58 without first obtaining written permission from The Arizona Thoroughbred. All advertising copy is submitted and subject to approval. We reserve the right to reject any copy that is misleading or that does not meet with the standards set by this publication. APRIL/MAY/JUNE 2014 $2.50 On the Cover INSIDE: WINNERS OF THE 2014 BREEDERS FESTIVAL Advertising rates supplied upon request. AWESOME STRETCH DUEL ArizonaTHOROUGHBRED G Faikir & J P Rocker OFFICIAL PUBLICATION OF THE ARIZONA THOROUGHBRED BREEDERS’ ASSOCIATION J P Rocker wins the 2014 Gene Fleming Breeders’ Derby G FAIKIR & J P ROCKER AWESOME STRETCH DUEL IN THE GENE FLEMING BREEDERS’ DERBY New Tax Court Case Discusses Passive Loss Issue by John Alan Cohan, Attorney at Law The IRS will often argue that a taxpayer is no eligible to and Louisiana Stallion Register. He made numerous trips to deduct losses for a horse business because it’s a “passive Louisiana during the years at issue, and met as many horse activity.” The Material Participation Test (sec. 469 IRS Code) breeders and farm managers as possible while there. defines a passive activity as a business in which the taxpayer does not “materially participate”. Administrative tasks included reviewing and paying bills, keeping the books, arranging for mortality insurance, An important new Tax Court case on this subject is Tolin vs. paperwork for registration. He subscribed to and read IRS Commissioner [T.C. Memo 2014-65], ruled in favor a number of horse industry publications, and attended of the taxpayer on this issue. The taxpayer, and attorney in seminars regarding equine health. He supervised editing of a Minneapolis, devoted significant time to thoroughbred racing video on his stallion. and breeding. The IRS claimed that the taxpayer’s losses from the thoroughbred business should be disallowed because The IRS disputed the time claimed by the taxpayer. Time they were passive activity losses. (The IRS conceded that the spent on an activity may be proven by any reasonable means. activity was a business not a hobby) It is not necessarily to have contemporaneous logs, although if available, that constitutes very strong evidence. The Material Participation Test requires that a taxpayer engage in the activity on a “regular, continuous and The IRS argued that much of the time spent by the taxpayer substantial basis.” The test also requires that the taxpayer constituted activities as an “investor,” not as an entrepreneur actually does participate in the activity as a principal or a of a going business. Under the Material Participation Test, manager, and that he actually does exercise the powers of activities as an “investor” are specifically excluded from time decision-making reposed in him. counted towards meeting the test. The taxpayer in this case argued that he had spent over 500 The Tax Court disagreed with the IRS on this point, hours per year in the activity - thus satisfying one of several saying: “Petitioner was directly involved in the day-to-day alterative standards to prove material participation. management and operation of the thoroughbred activity; therefore, any investor work he completed qualifies as He sent his breeding stallion to trainers, and the horse was participation for purpose of section 469.” entered in a number of races, earning $77,638. The stallion then sustained a leg injury that prematurely ended his career. In proving time expended people usually do not have The taxpayer then offered the stallion, Choosing Choice, for contemporaneous logs. Time may be proven using phone stud service, and bred to three of his own mares. He stood the records, credit cards, invoices, and a narrative summary of stallion on a farm in Louisiana to take advantage of the state’s the activities. Activities include phone conversations, emails, breeding incentive program. As to his own foals he sent them research, preparing and distributing promotional materials, as yearlings to individualized training programs. business trips, registration and insurance paperwork, reviewing and paying bills, record-keeper, continuing The taxpayer gave credible testimony about time he spent in education and administrative tasks. Third party witness managing his thoroughbred activity. He conferred daily by testimony (from trainers and advisers) is important to phone with his stallion manager trainers and another adviser; corroborate a taxpayer’s statement of time expended. ◆ he called breeders who might be interested in his stallion, and even made “cold calls” to members of the Louisiana John Alan Cohan is a lawyer who has served the farming, Thoroughbred Breeders’ Association directory. He mailed a ranching ad horse industries since 1981. He can be reached at promotional package to interested breeders with personalized (310) 278-0203, by e-mail at [email protected], or you letters. He placed full-page print ads in the Louisiana Horse, can see more at his website: www.johnalancohan.com. Arizona Thoroughbred | April/May/June 5 DESERT WILDCATTER Arizona Stallion Stakes 6 Arizona Thoroughbred | April/May/June Gaston Jewelry Ad_ATBA.qxd 10/28/08 7:24 PM Page 1 WE HAVE A STERLING REPUTATION ® ER723/SS EPD553 Horses & Jockey Charm SLH083 SLD553 EPH177 BV020 BV020-8 NH177 EPH177 NORTHWEST