Registration and access to the members-only sections of this website is restricted to current-year AHS members only. Outside registration for this site is not accepted.

Please log in to access this information:

Login

New AHS memberships are updated on a weekly basis and login credentials are provided automatically for members with valid email addresses. Visit the Membership > Members-Only FAQs page for further information and support. ]]> http://www.hanoverian.org/downloads/publications-archive/hv-print-media-archive/hvs-the-hanoverian-052012/feed/ 0 http://www.hanoverian.org/downloads/publications-archive/ahs-print-media-archive/the-american-hanoverian-spring-2012/ http://www.hanoverian.org/downloads/publications-archive/ahs-print-media-archive/the-american-hanoverian-spring-2012/#comments Thu, 10 May 2012 14:40:15 +0000 AHS http://www.hanoverian.org/?p=5599 The Spring issue of The American Hanoverian magazine is now available online to current-year AHS members. Click here to download the Spring 2012 issue. You must be a current member and logged in to access the downloadable PDF link.

Registration and access to the members-only sections of this website is restricted to current-year AHS members only. Outside registration for this site is not accepted.

Please log in to access this information:

Login

New AHS memberships are updated on a weekly basis and login credentials are provided automatically for members with valid email addresses. Visit the Membership > Members-Only FAQs page for further information and support. ]]> http://www.hanoverian.org/downloads/publications-archive/ahs-print-media-archive/the-american-hanoverian-spring-2012/feed/ 0 http://www.hanoverian.org/news/featured-article/apassionata-the-beginning-special-offer-for-ahs-members-and-friends/ http://www.hanoverian.org/news/featured-article/apassionata-the-beginning-special-offer-for-ahs-members-and-friends/#comments Wed, 09 May 2012 14:29:14 +0000 AHS http://www.hanoverian.org/?p=5588 Apassionata “The Beginning” is coming to North America throughout 2012 and 2013. Members and friends of the American Hanoverian Society are now able to receive a special offer of 10-15% off* your tickets and pay no Ticketmaster fees. (*10-15% off good for all performances and all regular priced seats except VIP, VIP Blue Ribbon and $25 tickets. Plus shipping. No limit. While supplies last. Discount is included in all listed prices.)

CLICK HERE TO BUY TODAY!

About the Show

Direct from Europe and now touring North America! Apassionata “The Beginning” captivates families and horse lovers alike with trick riding, dressage and jumping! See internationally renowned riding teams and over 40 beautiful horses from Shetland ponies to Friesians. Learn more.

Standing Ovation for the Royal Canadian Mounted Police in the Niedersachsenhalle

The opening of the auction left nothing to be desired – Serena-Serenity was named the top-priced horse of the day. New customers from Lower Saxony paid 40,000 Euro for the impressive mare. The 93 Hanoverian horses of the May collection were sold at an average of 10,395 Euro. The Sandro Hit/Fürst Heinrich daughter Serena-Serenity (breeder: Heinz Günnemann, Loxstedt, exhibitor: Sabine Tietz, Loxstedt), convincing with her three extraordinary basic gaits, had many fans during the auction training.

Customers from abroad knew about the quality of the collection: 37 horses of the May collection will move into new stalls in 14 different countries. Twelve horses were purchased by French customers, among them the most expensive horse from the collection of pleasure horses. The shiny black Lubina by Light and Easy/Rohdiamant (breeder and exhibitor: Hermann Janssen, Westoverledingen) was purchased at 14,000 Euro. Customers from France also acquired the top-priced jumper of the day, Conte du Rouet by Con-tendro/Balou du Rouet (breeder and exhibitor: Dr. Alexandra Görgens, Mühlen). Auctioneer Friedrich-Wilhelm Isernhagen accepted the bid for the impressive young sport horse at 20,000 Euro. The second biggest quantity of five horses will travel to Great Britain; three Hanoverians will cross the German border, direction Portugal responded Liechtenstein. Dr. Werner Schade finally concluded, “The prices were modest, and it was a customer-friendly auction.”

The 2,500 spectators in the sold-out Niedersachsenhalle experienced an incredibly overwhelming show event the evening before the May Auction. The Royal Canadian Mounted Police (RCMP) performed their Musical Ride as the crowning finish of a mixed show program. Prime Minister David McAllister was given the honor to open the show with the traditional salute. The “Mounties” in their impressive red uniforms and their 36 black Hanoverian horses captivated the audience with their sophisticated choreography and their rousing performances which finally ended in several minutes of thunderous applause and a standing ovation!

Photo: © T. Ernst

The Tax Court held that a married couple who engaged in a cattle and horse breeding activity were not engaged in a business, despite the full-time nature of the venture. The case was Garbini v. Commissioner IRS [T.C. Summary Opinion 2004-7]. Mr. Garbini, of Myrtle Creek, Oregon, listed his occupation as a rancher, and his wife indicated she was a housewife. Both taxpayers were retired during the two taxable years in issue, and for Mr. Garbini this was a full-time venture. They had a net loss of $127,341 in one year, and $124,584 for a second year at issue.

The court examined whether the taxpayers carried on the activity with the actual and honest objective of making a profit. Although a reasonable expectation of profit is not required, the facts and circumstances must indicate that the taxpayer entered into the activity, or continued the activity, with the actual and honest objective of making a profit.

The court said that the taxpayers did not seek expert advice before entering the activity, and that was viewed with disfavor. They had no business plan to prove that their activity originated with the honest objective of making a profit.

No single factor is controlling in deciding whether a horse or cattle venture is engaged in for profit. In applying the factors to determine profit objective, the court focused on the manner in which Mr. Garbini carried on the activity. The fact that the taxpayer carries on the activity in a businesslike manner and maintains complete and accurate books and records indicates that the activity is engaged in for profit. In this case, the court said that there was little by way of books and records. Rather, Mr. Garbini made a monthly list of expense categories and, based on his canceled checks, recorded the amounts expended for each category.

At trial, Mr. Garbini submitted various invoices, canceled checks, and the monthly lists for the taxable years in issue. The court said that he did not keep the type of records which could be used to increase the profitability of a business. He never prepared budgets or market projections which would outline strategies for ensuring a profitable business venture. The court said that his recordkeeping practice of creating monthly lists from canceled checks simply was inadequate and not indicative of a prudent and reasonable person in business.

Mr. Garbini said that he made efforts to reduce expenses in order to operate the ranch in a profitable manner. Nothing in the record indicated what efforts he actually made to reduce expenses. Mr. Garbini never ascertained how or when he would make a profit or how he could change his operating methods to improve his profitability. Mr. Garbini worked on the ranch almost every day and employed one full-time ranch hand, who performed general maintenance of the property and barns. Mr. Garbini occasionally hired outside temporary labor.

There were no sales during the years at issue.

One strength in this case that unfortunately was not set forth adequately in the evidence was that according to Mr. Garbini the ranch had increased in value as a result of improvements he had made. Mr. Garbini testified that he bought the property for $566,000 in its undeveloped condition, and its value at the time of trial was $15 million. However, he did not provide any evidence other than his verbal testimony.

In order to prove this, there must be introduced into evidence an expert’s report showing the appreciation in value, but in all the court had was the taxpayer’s testimony.

Mr. Garbini also argued that part of the ranch activity involved planting and harvesting trees. He stated that he had planted 3,000 to 5,000 trees per year, and that they are suitable for harvesting after 7 years. The court noted that no trees were harvested during the taxable years in issue.

The court also considered the history of income or losses with respect to the activity. Mr. Garbini did not provide a history of income or losses for the activity. During the taxable years in issue, losses exceeded $250,000, an average of $ 125,000 for each year. Mr. Garbini claimed that the losses have gradually declined, but this was not adequately presented.

Over a period of about 12 years, the losses were losses over $1,500,000. There was no evidence of any profit year.

The court considered the financial status of the taxpayers. The court noted that as a result of their other income, the taxpayers realized substantial tax benefits from the approximate $125,000 loss deduction for each taxable year in issue.

The court also said that there were elements of personal pleasure or recreation even though they did not ride the horses. The court simply said that the taxpayers probably had personal pleasure from residing on a large ranch.

Taking the record as a whole, the court concluded that the taxpayers did not possess the actual and honest objective of making a profit from their operations. Because they had no gross income for the taxable years in issue, none of their claimed expenses were deductible.

John Alan Cohan is a lawyer who has served the horse, livestock and farming industries since l98l. He serves clients in all 50 states, and can be reached at (310) 278-0203, or via e-mail at johnalancohan@aol.com. See more info on his website, www.JohnAlanCohan.com.

Photos: Courtesy High Valley Hanoverians

Photo: © wncphoto.com