Kentucky derby winnings

[TAXNJ]

How would you handle the tax return for the Kentucky Derby winner (not the horse)?

vs

Publishers Clearing House winner

[ATSMAN]

How would you handle the tax return for the Kentucky Derby winner (not the horse)?

vs

Publishers Clearing House winner

I never had to deal with a Publishers Clearing House Winner or Kentucky Derby winner but I have done several dog track race winners over the years. They were issued W2-G and I treated it as any other gambling winning. Had them give me their win loss statements from all gambling activities and the losses up to winning went on Sch A.

I assume a Derby winner would be issued a W2-G and the treatment would be similar??

[TAXNJ]

Ok how about

I never had to deal with a Publishers Clearing House Winner or Kentucky Derby winner but I have done several dog track race winners over the years. They were issued W2-G and I treated it as any other gambling winning. Had them give me their win loss statements from all gambling activities and the losses up to winning went on Sch A.

I assume a Derby winner would be issued a W2-G and the treatment would be similar??

Ok. How about tax treatment of the owners of the horses in the Kentucky Derby race?

[taxea]

do they have a horse racing business?

[TAXNJ]

Yes

do they have a horse racing business?

Yes for this scenario.

For example, the 2015 owner winner, Businessman Ahmed Zayat first entered Thoroughbred racing in 2005,

[ATSMAN]

Ok. How about tax treatment of the owners of the horses in the Kentucky Derby race?

I have done tax returns for Dog breeders but they were small time Sch C operations. I am assuming based on the multi-million dollar cost of these race horses and the training and upkeep these returns are a "tab bit complicated" beyond my pay grade!

[TAXNJ]

Well

I have done tax returns for Dog breeders but they were small time Sch C operations. I am assuming based on the multi-million dollar cost of these race horses and the training and upkeep these returns are a "tab bit complicated" beyond my pay grade!

Well based on your statement "I have done tax returns for Dog breeders but they were small time Sch. C operations" sounds like your background experience would make you able to handle with the proper resources.

[ATSMAN]

Well based on your statement "I have done tax returns for Dog breeders but they were small time Sch. C operations" sounds like your background experience would make you able to handle with the proper resources.

The key word is "proper resources"! I certainly don't want to bite more than I can can chew!

I just declined an engagement to do a 1041 and estate return for a relative of one of my clients because it involved 3 states and foreign assets. I could have taken the engagement and "learned" through the process but I wanted to be fair to the client and explained that I just don't have the resources right now to do it right and be sure of it.

Over the years I have learned not to over extend myself. I am just a one person shop with part time help.

[TAXNJ]

Atsman

The key word is "proper resources"! I certainly don't want to bite more than I can can chew!

I just declined an engagement to do a 1041 and estate return for a relative of one of my clients because it involved 3 states and foreign assets. I could have taken the engagement and "learned" through the process but I wanted to be fair to the client and explained that I just don't have the resources right now to do it right and be sure of it.

Over the years I have learned not to over extend myself. I am just a one person shop with part time help.

Smart strategy on your part. As you mentioned in your prior post, one would need to plan what the best tax strategy in type of organization they need to form. In addition to federal tax, there are state and/or county taxes and counties that may re-zone their farms creating more issues.

Listed below are some brief articles. Thanks for your input.

http://taxfoundation.org/blog/taxes-kentucky-derby-winnings-could-be-476-percent

http://www.greenco.com/insights/horse-industry-tax-business-alert

[ATSMAN]

Changing the subject a bit but still keeping up with the do not bite more than you can chew theme.

Yesterday on ABC I heard former President Clinton say that the reason foreign donors were not disclosed properly is because the fellow who prepared his 990 form put it on the wrong line.

Time to fire that tax preparer and get a new one, perhaps a competent preparer!!

[TAXNJ]

2 sides

Changing the subject a bit but still keeping up with the do not bite more than you can chew theme.

Yesterday on ABC I heard former President Clinton say that the reason foreign donors were not disclosed properly is because the fellow who prepared his 990 form put it on the wrong line.

Time to fire that tax preparer and get a new one, perhaps a competent preparer!!

2 sides to each story. What did preparer say? Still using the same preparer?

See attached for 2013

https://www.clintonfoundation.org/sites/default/files/clinton_foundation_report_public_11-19-14.pdf

And since you mentioned a media report, check this

https://www.charitynavigator.org/index.cfm?bay=search.profile&ein=311580204#.VUi9fnD3aK0

[taxea]

The winnings go on his business return as income and the expenses also. Unless he didn't get the winnings from his own horse, in which case, it would be ln 21 gambling income and Sch A for gambling losses (if any)

[TAXNJ]

Yes

The winnings go on his business return as income and the expenses also. Unless he didn't get the winnings from his own horse, in which case, it would be ln 21 gambling income and Sch A for gambling losses (if any)

Correct. Interested in knowing if any land in Paradise, Hawaii available to purchase for horse racing or breeding?

[taxea]

Correct. Interested in knowing if any land in Paradise, Hawaii available to purchase for horse racing or breeding?

Sure but you would have to include a racetrack.