ATBA News – Winter, 2013

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ATBA News – Winter, 2013 INSIDE: The Winners of the 2013 ATBA Fall Sales Stakes $2.50 OCTOBER/NOVEMBER/DECEMBER 2013 Arizona THOROUGHBRED OFFICIAL PUBLICATION OF THE ARIZONA THOROUGHBRED BREEDERS’ ASSOCIATION 2014 STALLION REGISTRY Hidden Springs Ranch Hidden Springs Ranch 10225 N. 51st AVENUE • GLENDALE, ARIZONA 85302 SARIVAL Farms is located less than 10 miles Southwest of Turf Paradise Race Track. P.O. Box 68, 18701 Highway 89 Peeples Valley Yarnell, Az 85362 RASMUSSEN PROPERTIES, LLC Phoenix: 602-381-8800 l Local: 928-427-9424 l Fax: 928-427-9525 E-Mail: [email protected] l Web: thehiddensprings.net MANNY ORTIZ MICHELLE VARGAS Trainer Farm Manager (602) 510-2240 (602) 435-5333 SERVICES: Boarding • Breeding • Breaking • Training OFFERING: Grass Pastures • 40 lay-up pens • bedded in shavings Two Barns, totaling 22 stalls •Two Hot-Walkers • 5/8 mile training track As we reflect over the past year, we have so STALLIONS BRITE EYED N LUCKY IBETIWIN much to be thankful for... High Brite - Lucky Spirit, by Exemplary Leader Western Fame - Strictly Speaking, by General Meeting Stud Fee: $I,000 Stud Fee: $I,000 Lifetime Earnlngs of $53,341 In 18 Starts Lifetime Earnings of $94,497 May you all have a wonderful and This is his first year standing YOUBETSHEWON- winner of the blessed Holiday Season! 2011 ATBA Fall Sale Stakes Leading Filly Earner of $92,292 Arizona-Bred Champion Two-Year Old Filly of 2012 2 Arizona Thoroughbred October/November/December October/November/December Arizona Thoroughbred 3 2131097_Sarival.indd 1 9/13/13 11:50 AM October/November/December 2013 • Issue IV IRS Manual Reveals Attitude © 2010 by The Arizona Thoroughbred Breeders IRS Manual Reveals Attitude Toward Industry 5-6 Association Incorporated Toward Industry P.O. Box 41774, Phoenix, Arizona 85080 By John Alan Cohan, Attorney at Law Telephone: (602) 942-1310 • Fax: (602) 942-8225 ATBA offices are located at 1501 West Bell Road, Commercial or Non-Commercial 8-9 Phoenix, Arizona, 85023. The Arizona Thoroughbred is published quarterly (annually publishes a Stallion Registry) in Phoenix, The IRS Manual has a section in the Audit situations, the cattle activity was not engaged in Arizona by the Arizona Thoroughbred Breeders Red Zeus - Walter R. Cluer Memorial Stakes 10-11 Association, a non-profit corporation, dedicated to the production of better Arizona-Bred Thoroughbred horses Technique Guide entitled “IRC Section 183: for profit, but rather for the purpose of reducing for better Arizona Thoroughbred racing. Opinions expressed in signed articles are those of the Molly Pearson - Sweeps Both Divisions 12-15 Farm Hobby Losses With Cattle Operations property taxes.” authors and do not necessarily reflect policies of the ATBA or this magazine. Publication of any material and Horse Activities.” The guide is intended originating herein is expressly forbidden without first obtaining written permission from The Arizona ATBA Fall Sales Stakes (Colts) - I Rock The Party 16-17 to alert auditors to situations pertaining to “The examiner should be alert that one taxpayers Thoroughbred. All advertising copy is submitted and subject to the horse and cattle industries. The guide says may not maintain the contemporaneous records approval. We reserve the right to reject any copy that is misleading or that does not meet with the standards set ATBA Fall Sales Stakes (Fillies) - Lazy Daisy May 18-19 that “Current trends indicate that these two necessary to satisfy the requirements of the by this publication. Advertising rates supplied upon request. activities, due to their nature, contain certain breed association. Some of the data may be ATBA Fall Yearling & Mixed Sale 20-21 opportunities for taxpayer abuse.” Auditors are “plugged”. Contemporaneous records would advised: Many of the taxpayers who potentially include some type of field book that is carried OFFICERS - ATBA Sale Results 22-23 fall under the provisions of IRC section 183 with out to the pasture. The data would be transferred President: Kevin Owens Vice-President: Dennis Miller respect to horse and cattle activities have been from the field book to a permanent record.” Treasurer/Secretary: Wende Macumber ATBA Princess of Palms Stakes - Tribal Gal 24-25 involved in such activities during their youth. These taxpayers have grown up on farms or “The taxpayer’s use of incomplete records could DIRECTORS - Track Talk 26 John Campo III, Michael Chambers, had close relatives who operated farms. Other indicate a lack of profit motive.” Ron Chappell, Marvin Fleming, Shawn Haggstrom, William Matthews, Obituaries 28 taxpayers had unfulfilled childhood aspirations Jan Osborn, Scott Rollins, Filippo Santoro, Lee Vaughn, Dave Williams and to be involved with such activities, but “The taxpayer should have a formal written plan. R. C. “Rink” Williams. Arizona-bred Winners 31-32 circumstances prevented participation. As adults, The plan should demonstrate the taxpayer’s these taxpayers have achieved the financial financial and economic forecast for the activity. ATBA ADMINISTRATIVE STAFF - ATBA Sale Winners 33-35 wherewithal which permits participation.” The plan should not be a “fantasy Schedule For Executive Director: Dove Ward Arizona-Bred Registry: Berdette Felipe C.” In other words, some taxpayers may wish to Associate Editor: Dove Ward Arizona Stallion Standings 36-37 Other selected provisions in the guide are quoted submit a business plan that is nothing more than Advertising: A.T.B.A. Office below: a Schedule F or C, which unrealistically overstates 2014 Foal Crop Certification “New Fee” Schedule 29 the expenses for the activity. This is not an “The taxpayers who have had prior experience acceptable business plan.” CONTRIBUTORS - Calendar/Advertising Index 39 in these activities find peace and solace in BLOODSTOCK RESEARCH COADY PHOTOGRAPHY returning to this lifestyle. These taxpayers have “The examiner should not request the business JOHN ALAN COHAN Attention Stallion Owners 40 THE JOCKEY CLUB affection for the horses as well as the cattle. The plan in the first information Document Request PAULA WELCH PRATHER HORSE CONNECTION 2014 Stallion Registry 41 taxpayers find pleasure and satisfaction from (IDR). Otherwise, the examiner will possible FEDERAL MOTORCARRIER SAFETY ADMINISTRATION watching their herd and baby animals grazing receive a ‘canned’ document. The examiner BENOIT PHOTOGRAPHY in the pastures. Examiners will frequently find should inquire as to the business plan during the DEBBIE ZIMMERMAN BRISNET.COM On the Cover retirement homes nestled on the land set aside Initial Interview and follow-up with a subsequent for the activity.” IDR.” SUBSCRIPTIONS - “Some taxpayers have found that agricultural “Some taxpayers will attempt to downplay any $15.00 annually domestic; $24.00 foreign status will reduce the property taxes on their pleasurable aspects of the activity. Some will land. Small numbers of cattle have been attempt to portray the activity as laborious with maintained on large parcels of land in order emphasis placed on the drudgery. to qualify for this agricultural status. In such Continued on Next Page Continued on Next Page 4 Arizona Thoroughbred October/November/December October/November/December Arizona Thoroughbred 5 Gaston Jewelers These taxpayers know where the examination is leading. They will emphasize the labor to clean or muck the stalls. The examiner needs to understand that if these taxpayers care about their animals that any such task is a labor of love or concern for the well being of the animal.” “The examiner should establish if the taxpayer has used any advisors or expert in the operation of the activity. Obtain names, position titles, and addresses of these advisors. Document how the advisors were chosen by the taxpayer. Establish the credentials of the advisors. Document if a personal relationship exists between the taxpayer and the advisors.” “Many taxpayers will express a passion for their activity. A skilled examiner will be able to draw this passion from the taxpayer through conversation.” “The tax return may have minimal or zero gross receipts. The activity’s history of gross receipts should be addresses. The examiner needs to determine why there have been minimal or no gross receipts. The examiner needs to determine specifically when the taxpayer expects for gross receipts to increase and specifically how the taxpayer expects to accomplish this.” “Determine that the income source truly related to the activity contained in the Schedule. Examiners should also determine that the income source truly exists as some taxpayers have manufactured income in order to make it appear as though the activity earned some income. Manufactured income raises a potential fraud issue.” “Horse activities provide a competitive outlet for some taxpayers. For example, some taxpayers have been quoted as saying that cutting horses competitions provide stress relief from the chaos in the corporate world.” “The thrill of competition draws participants into various shows and competitive events. A sense of accomplishment attracts participants to compete in events where there may not be any monetary compensation for their efforts. Great pride accompanies the receipt of large trophies and fancy rosette ribbons and award banners.” “The taxpayer knows about the nine relevant factors. A taxpayer with a savvy representative has been advised to downplay the pleasurable aspects and emphasize the drudgery and dirty work of the activity.” “A significant amount of showing and showing-related expenses could be indicative of an activity not engaged in for profit if the prizes are minimal in financial remuneration. The examiner needs to determine the specific purpose for which the taxpayer participates in show competitions. The examiner needs to determine if the show winnings justify the showing expenses.” v Free Ring Sizing Chain Repair Watch Battery John Alan Cohan is an attorney who has served the farming, livestock and horse industries since 1981. He can be reached at: 310-278-0203 With can of food for St. Vincent’s DePaul 95 or via e-mail at [email protected]. Website address: www.JohnAlanCohan.com $25 $9 Down Only. Reg.
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