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☛ God, Guts, Guns and Taxes – 1-5-18

Posted by on Jan 5, 2018 in BREAKING NEWS, COW HORSE NEWS, CUTTING NEWS, HORSE NEWS, INDUSTRY NEWS, LAWSUITS & INDICTMENTS, REINING NEWS, RICK'S CORNER, WHO, WHAT & WHERE | 15 comments

GOD, GUTS, GUNS AND TAXES

By Richard E. “Rick” Dennis
Jan. 5, 2018

 

by Richard E. Dennis

The American Horse Industry, Avoiding the Pitfalls by Rick Dennis.

While growing up in Alabama in the 1950s, my grand father always stressed these four premises to live by:  “Always put GOD first in your life, have the GUTS to take on life and live successfully, keep a GUN handy in case you need it and always pay your TAXES.”

Paying taxes is a phrase resonating with every working American this time of the year simply due to the fact April 15 is the time we either file our taxes or file for an extension. Like the old adage, “There are two certainties in life: Death and Taxes!”  No one gets out alive and with new tax laws, Uncle Sam can and will tax you in the grave.

However, there are steps we can take to minimize the amount of taxes we pay by simply taking advantage of the built-in deductions and write offs included in the IRS tax code.

In my opinion, one fact of certainty is: “The Internal Revenue Service (IRS) seems to hate horses.”  In my book THE AMERICAN HORSE INDUSTRY, Avoiding The Pitfalls, I devoted an entire chapter to identifying whether your horse operation is a business or a hobby. One of the included items in this book is a chapter that stresses the importance of determining whether or not your horse operation is a business or a hobby as well as other necessary factors to successfully survive an IRS or State audit of your horse operation and yourself.

 

Case-In-Point:

In June 2016, I opened a new bank account at Chase Bank in Covington, Louisiana.  According to the information supplied by the bank officer who opened my account, new Federal and State tax regulations and laws require the financial institution to be the first line of defense in identifying fraudulent money laundering or illegal operations by account holders. Essentially, the bank opens your account with the information you supply them including providing your name, social security number, business name and business Tax Identification Number (TIN), along with a copy of your completed financial questionnaire to Federal and State taxing agencies for verification, authentication of your citizenship and to check for any outstanding tax bills, liens, etc.

Further, the brief financial questionnaire generally encompasses annual income, expenses, net profits for a given period, tax filings, assets and liabilities. In essence, and in my opinion, this is used for a comparison by the Federal and State taxing agencies to perform a brief audit of prior tax filings to determine the accuracy of your prior tax reports, among other items of interest. According to the Chase Bank officer, this is a requirement to open a bank account with Chase Bank. No completed financial questionnaire = no bank account!

 

Maintaining Immaculate Financial Records:

Another aspect stressed in my book is the importance of maintaining immaculate financial records for both your personal and business financial reporting. For the record, I’m in the horse business and I file a Schedule C, along with my personal 1040, which represents my Limited Liability Company’s financial records. In my case and after opening the bank account, I received an arbitrary tax assessment from the State of Louisiana for a tax bill of $41,589.73 for the 2015 year.

Knowing that I didn’t owe the proposed tax liability, I contacted the Louisiana Department of Revenue and inquired about the certified letter I had received and I was informed that an unnamed source had provided to the State that I made $701,400.00 in 2015. I informed the State of Louisiana tax representative that the figure she quoted me was more than my gross annual income. In fact, it was a well-documented and IRS-approved 20-year “carry-forward casualty loss” from Hurricane Katrina back in 2005.

However, I was told I had two choices: 1) Protest the arbitrary assessment through the tax process or 2) pay the amount assessed plus interest and penalty.

If I did not file an objection, I would also be assessed a taxable amount by the IRS to include interest and penalties. The worst that could happen if I didn’t address this scenario is: I would be charged with tax evasion, my bank accounts would be seized, tax liens would be filed on my property and I would face prosecution.

I elected to fight the proposed tax liability and requested a hearing. On the day of the hearing, I represented myself “in-proper-person,” essentially meaning I was my own lawyer. This is not a recommendation that I would make to everyone.

I figured that since I knew my tax records better than anyone, I would be the best person to explain my case at the hearing. On hearing day, I was armed with my Federal and State tax filings from 2005 forward, which completely documented the $769,000.00 20-year carry-forward loss as well as the very well documented IRS approval of the loss. At the hearing I explained, that whoever their “erroneous source” was, he or she failed to recognize that there was a minus sign in the front of my 2015 tax filing amount and the -$701,400.00 carry forward to my 2016 tax year had a minus sign, not a plus sign. Therefore, the amount was a loss and not income.

 

Resolution:

On Jan. 2, 2018 I received a letter from the Louisiana Department of Revenue dated December 29, 2017 stating, “The outstanding liability for the above referenced period(s) has been cancelled based on the information provided. Thank you for your cooperation in this matter.”

Over all, we all have to pay taxes.  My suggestion to all readers of this article is to keep and maintain immaculate financial records with every annual tax filing. I keep all of my annual tax filings instead of merely the three years suggested by the IRS.  If I hadn’t had all of my tax filings readily at hand, the outcome of this saga might have resulted in an ominous ending.

Click for tax letter from state of Louisiana>>

 

Another Happy Ending:


Recently I received a Federal Tax ruling entitled UNITED STATES TAX COURT, Finis R. Welch and Linda J. Waite – Petitioners Versus Commissioner of Internal Revenue – Respondent.  This tax ruling is an extremely good read and involves another individual in the cutting horse industry which resulted in the cancellation of millions of dollars in proposed tax liabilities due to their immaculate records retention.

Click for Stunning Tax Court Victory>>

Click for Center Ranch Tax Ruling>>

Certified Public Accountant (CPA):

For the record, I’m not a certified public accountant. However, I’ve been in business for 33 years with a 48-year professional background including: Criminal Investigations and Prosecutions, Forensic Audit, Risk Management and a 19-year history as a professional in the horse business but I highly recommend the incorporation of a certified public accountant in your life to formulate your tax filings.

 

Determining Whether You’re A Business Or A Hobby:

The key to operating a successful horse business is to determine whether you’re in the horse business for fun or to make a profit as a business owner doing something you love. If the former is your answer, go have fun. If the latter is your answer and you’ve decided to enter the equine industry as a business owner, then I suggest you perform a self evaluation of your proposed or existing business to determine if all of your bases are covered: For example:

1. What is your business entity: a Corporation, Limited Liability Company, Sole-Owned Proprietorship, Partnership, etc.,?

2. Does your business have its own Federal Tax Identification Number (which you should have), or are you using your social security number for this?

3. How are your bank accounts set up? In order to avoid the “co-mingling of Funds Rule,” i.e., mixing personal non-business funds with business funds, you need to have separate bank accounts: one for your personal and one for your business.

4. If your business is like mine, where I receive checks in the mail for services rendered as well as cash payments, are you incorporating the use of a cash book to keep track of these funds, especially if you aren’t depositing the cash in the bank?  If not, I suggest you incorporate one and each time you spend from this “stash of cash,” make a record of it along with maintaining a receipt for spent funds.

5. Are your accounting books immaculate? If not, seek the advice of a Certified Public Accountant to assist you in this matter.

6. Does your horse business have a written “Business Plan?”  If not, I suggest you consult with a Certified Public Account and write one.  Essentially, your business plan is your survivability insurance in the event of audit.  After the key phrase used by the auditors is, “Are you in business to make a profit?”

7. “Intent To Make A Profit” is your key phrase you should memorize in all of your business affairs. During an audit, this separates you and your horse business from being identified as a hobby versus a viable business. It’s OK not to make a profit if you truly intended to make a profit during an annual period. However, you need to consult with a Certified Public Accountant to further explain this aspect of the tax code.

In setting up your business, always show an intent to make a profit by using advertising. I suggest to all business owners that they should have a web site to promote their business on the internet. Also, it’s an impressive marketing tool for prospective clients to evaluate your services.

An immaculate and accurate set of books will allow your tax preparer to utilize all of the items available to you as a business owner to minimize the amount of taxes you pay during an annual tax filing cycle as well as a defense in the event of a tax audit.

“Until Next Time, Keep Em Between The Bridle!”

WIND RIVER COMPANY LLC

Richard E. “Rick” Dennis

Managing Member

Phone: (985) 630-3500

Email: windrivercompany@gmail.com

Email – Personal: windrivercompany.rd@gmail.com

Web Site: http://www.windrivercompanyllc.com

 

 

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☛ South Point Hotel & Casino owner gives employees $1M bonus due to tax reform bill – 1-5-18

Posted by on Jan 5, 2018 in BREAKING NEWS, COW HORSE NEWS, CUTTING NEWS, HORSE NEWS, INDUSTRY NEWS, REINING NEWS, WHO, WHAT & WHERE | 0 comments

SOUTH POINT HOTEL, CASINO AND ARENA OWNER GIVING EMPLOYEES $1M – THANKS TO PRESIDENT TRUMP

Press release from Joyce Lupiani
Jan. 5, 2018

The Las Vegas South Point Hotel and Casino owner Michael Gaughan, has announced that he will be giving employees an extra $1M this year because of President Donald Trump’s tax reform bill.

“Las Vegas has experienced a significant amount of growth over the past few years and this tax reform will continue to drive the economy of the city,” said Gaughan. “The new bill will  have a monumental effect on our economy and, in turn, our property. We want to be sure that our extended family is taken care of.”

Gaughan also said that employee bonuses will also double this year, In addition, he is rescinding the price increase for employee health insurance,

The South Point is located on Las Vegas Boulevard, a couple of miles south of the Las Vegas Strip. The property is known for its equestrian event facility and also has a multi-million dollar professional bowling tournament facility.

The Gaughan family has been instrumental in the development of Las Vegas. Jackie Gaughan, Michael’s father was an early owner and is best-known for his ownership of the El Cortez in Downtown Las Vegas. Jackie Gaughan also owned the Las Vegas Club and The Plaza.

Michael Gaughan is also the former owner of a NASCAR team and the main sponsor of the 2018 NASCAR Cup playoff race. Michael is also the operator of the slot machines at McCaran International Airport.

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☛ Roger Harris passes at age 67 – 1-5-18

Posted by on Jan 5, 2018 in BREAKING NEWS, CUTTING NEWS, WHO, WHAT & WHERE | 0 comments

ROGER HARRIS PASSES AWAY AT AGE 67

Jan. 5, 2018

Roger Harris, 67, passed away at his home in Ben Wheeler, Texas, Thursday, Jan. 4, due to liver failure. Roger had been in hospice at his home for a few days before his death and his wife Jennifer and son Pug with with him when he passed away.

Many cutters knew and loved Roger and is wife Jennifer as they were very active in the NCHA, showing cutting horses and Jennifer being the secretary at many shows.

Besides his wife, Jennifer, Roger leaves behind two grown children: Angie Wood and Nicholas “Pug” Harris.

Funeral services will be held in Ben Wheeler, Texas, at the Heritage Trail Cowboy Church on Monday, Jan. 8 at 11 a.m. The Church is two miles west of Ben Wheeler on farm road 858.

You can your cards to Jennifer at 2634 FM 1653, Ben Wheeler, Texas 75754.

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☛ Horse slaughter plant in Canada closed due to EU regulations 1-4-18

Posted by on Jan 4, 2018 in BREAKING NEWS, COW HORSE NEWS, CUTTING NEWS, HORSE NEWS, INDUSTRY NEWS, REINING NEWS, WHO, WHAT & WHERE | 0 comments

HORSE SLAUGHTER PLANT IN CANADA CLOSED DUE TO EU REGULATIONS

NEW EU RULES SAY HORSES MUST BE HELD AT A FEEDLOT FOR AT LEAST 6 MONTHS

Jan. 4, 2018

Horse slaughter is a very emotional topic and one only has to read the remarks following each horse slaughter article to see that there are two distinct and emotional sides to the slaughter of horses. While there has been a constant battle to reopen slaughter plants in the United States, forcing dealers to take the horses to slaughter plants in Mexico and Canada.

However, the European Union has basically solved the problem for us as far as slaughter plants in Canada are concerned. New European Union regulations have caused the Canadian slaughterhouse, located in Saint Andre-Avelin, Quebec, to temporarily close due to the new rules regarding horse slaughter, which states that before the  horses are slaughtered, they must be held at a feedlot in Canada for at least six months before they can be slaughtered.

As a result, the Canada slaughterhouse has not collapsed but have had to find a solution as fast as they can. The slaughterhouse had to lay off 60 workers and close as it is economically not feasible to feed horses in a feedlot for six months before they are slaughtered.

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☛ Tax reform to benefit farmers and ranchers 1-4-18

Posted by on Jan 4, 2018 in BREAKING NEWS, COW HORSE NEWS, CUTTING NEWS, HEALTH AND WEALTH, HORSE NEWS, INDUSTRY NEWS, REINING NEWS, WHO, WHAT & WHERE | 0 comments

TAX REFORM PACKAGE TO BENEFIT FARMERS AND RANCHERS

Jan. 4, 2018

According to Zippy Duvall, the President of the American Farm Bureau Federation, “The tax reform package passed by Congress this week will result in lower taxes for the vast majority of farmers and ranchers. This tax overhaul includes many changes to the tax code, most notably lower individual tax rates that will benefit farmers and ranchers. Ninety-four percent of farmers and ranchers pay taxes as individuals and those rates are coming down. The bill also maintains all of the important deductions and credits that farmers rely on. So, thanks to a lot of hard work by Congress and the administration, farmers will have both lower rates and all the tools they’ve always had to manage their businesses.

“Starting next year, farmers and ranchers will also be able to take a 20 percent deduction off their business income. That’s new, and it will reduce the taxes farmers owe. The bill also doubles the estate tax exemption to $11 million per person, which will provide relief to the vast majority of farmers and ranchers. We look forward to President Trump signing this bill. Most of the provisions in this tax bill are temporary, lasting for only seven years, so Farm Bureau will now focus our work on making those important tax deductions, lower rates and the estate tax exemption permanent.”

According to Michael Clements of the American Farm Bureau Federation, “Congress is providing farmers and ranchers with a last-minute holiday gift: lower taxes in the future. A tax code overhaul passed by both the House and the Senate this week makes many changes to the tax code that will benefit farmers and ranchers.

New to the tax code, the bill includes a deduction for business income. Also, the estate tax, long opposed by the Farm Bureau, should no longer be a factor for most farmers and ranchers following changes to the estate tax exemption.

American Farm Bureau Federation tax specialist Pat Wolff says the bill includes lower individual tax rates.  “We know that 94 percent of farmers and ranchers pay taxes as individuals and the one tax rates are coming down. The bill also maintains all of the important deductions and credits that farmers rely on. So, farmers have all the tools that they’ve always had to manage their business.

“Starting next year, farmers and ranchers will be able to take a 20 percent deduction of their business income. So if they made $200, they’ll be able to take a $2 deduction. That’s new and will also help reduce the taxes that are owed.

“The bill doubles the estate tax exemption to $11 million per person. At that level, the vast majority of farmers and ranchers won’t have to worry about the estate tax anymore. Most of the provisions are temporary, they only last for seven years. So starting this year, Farm Bureau will be working to make those  important tax deductions the lower rates and the estate tax exemption permanent.”

Also, a recently introduced bill would continue several expired tax provisions important to farmers and ranchers. Offered by the Senate Finance Committee Chairman Orrin Hatch (R-Uah), the Tax Extenders Act of 2017 (S.2256) would extend several tax credits biodiesel, renewable energy and for short line railroads. Most of the credits expired in 2016.

In a recent letter to House and Senate leaders urging them to pass legislation extending these key provisions, the American Farm Bureau Federation and more than 55 other organizations explained that these expired provisions impact sectors vital to the U.S. economy and support tens of thousands of jobs nationwide.

“Acting to extend these expired tax provisions will allow businesses and individuals to make important planning decisions. Allowing these provisions to remain lapsed creates confusion in the marketplace and effectively increases taxes on entities that create jobs and economic growth,” the groups wrote.

House and Senate tax writing committees are expected to work on tax extenders in January.

  • The Tax Extenders Act of 2017 would continue the following Farm Bureau-supported tax provisions, most of which expired in 2016, for 2017 and 2018:
  • The $1.01-per-gallon income tax credit for cellulosic biofuel
    The $1.00-per-gallon biodiesel and renewable diesel tax credits for biodiesel and blending biodiesel
  • The 10-cents-per-gallon Small Agri-Biodiesel Producer Credit
  • The $1.00-per-gallon biodiesel excise tax credit that can be taken against fuel taxes The 30-percent investment tax credit for installing alternative vehicle refueling property
  • The 2.3 cents-per-kilowatt hour Production Tax Credit for energy from closed-loop biomass and the 1.2 cent-per-kilowatt- hour credit for closed-loop biomass
  • The option of taking an investment tax credit in lieu of Production Tax Credit (Currently, it’s 24 percent for 2017, 18 percent for 2018, 12 percent for 2019 and expires in 2020.)
  • The investment tax credit for installation costs of facilities that produce electricity from wind (Currently, it’s 24 percent for 2017, 18 percent for 2018, 12 percent for 2019 and expires in 2020.)
  • The Distributed Wind Investment Tax Credit for electricity production facilities The 50-percent Railroad Track Maintenance Credit for short line railroads
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☛ 24 horses perish in fire on Connecticut farm 12-29-17

Posted by on Dec 29, 2017 in BREAKING NEWS, HORSE NEWS, INDUSTRY NEWS, WHO, WHAT & WHERE | 0 comments

TWO DOZEN HORSES PERISH IN FIRE AT SIMSBURY, CONNECTICUT

Dec. 29, 2017
Reprint from Hartford Courant
By Matthew Ormseth and Christine Dempsey

Two dozen horses died in an early morning blaze at Folly Farm in Simsbury Thursday, one of the deadliest barn fires nationally in recent years and a staggering blow to the family-owned farm.

All 24 horses housed in the farm’s largest barn died of smoke inhalation, according to James Baldis, chief of Simsbury Volunteer Fire Department. On Facebook, the farm’s manager, Alison Patricelli, said the 19 horses housed in other barns on the property were unharmed.

The fire’s grim toll is among the worst in recent years, exceeded only by a 2016 Kentucky barn fire — apparently sparked by lightning — that killed 27 horses, and a 2014 fire in suburban Chicago that left 32 horses dead.

Fire officials have yet to determine what sparked the blaze, which was first reported at 6:50 a.m. and knocked down by 7 a.m. The barn’s doorways appeared blackened, though no structural damage was visible Thursday morning as investigators worked in biting temperatures to determine what started the fire.

Though officials had not yet determined what started the fire as of Thursday night, Simsbury Fire Marshal Kevin Kowalski said they believe the fire was accidental, that it started in the middle of the stall area and that it had likely been smoldering for hours.

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There was minimal structural damage to the arena barn, but two dozen horses died in an early morning fire at Folly Farm in Simsbury Thursday, the farm said. (John Woike / Hartford Courant)

Patricelli wrote on Facebook that most of the horses killed were part of the farm’s riding and polo schools, though three of the dead were privately owned.

“These gentle souls taught hundreds of children and adults how to ride, to play polo, and to love through the years,” Patricelli wrote on Facebook. “They were the heart and soul of Folly Farm and of our lives.”

Folly Farm, a sprawling 175-acre property at the base of Talcott Mountain in Simsbury, boards both privately owned horses and the farm’s own stock. The farm offers polo and equestrian lessons, and its grounds include the Simsbury Polo Club. The farm also hosts weddings and other celebrations.

Doug Norrdin, Alison Patricelli’s son, roamed the grounds Thursday morning. Doug, 13, said his mother was in California but is returning immediately to Connecticut. “Some of my mom’s special horses were in there, and I think they’re all gone,” he said. “My mom texted me this morning saying she’s pretty sad.”

Doug’s grandfather, Robert E. Patricelli, bought the 100-year-old farm when it was in foreclosure in 1981. A dairy and show cow farm under its previous owners, the Patricellis brought polo to its grounds in 2016 with the creation of the Simsbury Polo Club and a year-round polo school.

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