Ann Romney's horse

[snopes]

Comment:
Saw the following on Facebook going around today:

Stay at home mom Ann Romney's tax deductions for her dressage horse exceed
the average American's median income.

Is it true?

[snopes]

Comment: A friend posted the following on Facebook and I wondered if it is
true:

-------------------------

One of Ann Romney’s horses, Rafalca, qualified today to compete in the
London Olympics this summer...

It’s an expensive hobby but in order to shield themselves from losses
(poor babies), the 1%ers have convinced congress to allow for a tax
deduction such that they can write them off. Oh to be able to write off
losses associated with owning a lowly dog or cat or parakeet, huh?

The Romney campaign hasn’t spelled out what kind of tax deductions it
wants to close in order to pay for lower headline income tax rates, but
perhaps something related to horses could do the trick:

As millions tune into the Olympics in prime time this summer, just before
Mr. Romney will be reintroducing himself to the nation at the Republican
convention, viewers are likely to see “up close and personal” segments on
NBC about the Romneys and dressage, a sport of six-figure horses and
$1,000 saddles. The Romneys declared a loss of $77,000 on their 2010 tax
returns for the share in the care and feeding of Rafalca, which Mrs.
Romney owns with Mr. Ebeling’s wife, Amy, and a family friend, Beth
Meyers.

Meanwhile, the median household income in the United States in 2010 was
$45,800.

So the Romneys wrote off more than $30,000 in horse-related losses last
year than the average yearly household income.

[A Turtle Named Mack]

Well, it is an expensive pursuit, but I would guess it is deductible because it is operated as a business, with various opportunities for money-making - although truth be told, it rarely is profitable, unless you get to sell semen from your Triple Crown winner. There are lots of hobbies that involve money-making opportunities that therefore allow business expense deductions, even though you pretty much never show a profit.

[Ryda Wong, EBfCo.]

Originally Posted by A Turtle Named Mack

although truth be told, it rarely is profitable, unless you get to sell semen from your Triple Crown winner.

There isn't a triple crown in dressage.

[A Turtle Named Mack]

Originally Posted by Ryda Wong, EBfCo.

There isn't a triple crown in dressage.

You're right - I was thinking of thoroughbreds in general. The same breed is used (according to a woman I had to interview who kept dressage horses), with the difference being in the temperament and trainability.

[Ryda Wong, EBfCo.]

Although TBs are used in dressage, far more of the dressage horses are continental warmblood breeds, like Hanovarians and (as Ms. Romney's is) Olenburgs. You will rarely see a TB in Olympic-Level dressage.

[GenYus234]

Also, horse racing horses (at least the ones that would qualify for the Triple Crown) must be bred the old-fashioned way, artificial insemination is not allowed.

[Sue Bee]

Originally Posted by GenYus234

Also, horse racing horses (at least the ones that would qualify for the Triple Crown) must be bred the old-fashioned way, artificial insemination is not allowed.

This is why you will never see a Barbaro descendent in racing. No live cover.

[Mateus]

ROMNEY'S LEVY WAS DRY

The average full-time U.S. worker is making almost $40,000 a year; in 2010, Mitt and Ann Romney lost about twice that amount on fancy show horses.

In 2010, the couple took an almost $78,000 loss on Rob Rom Enterprises, a venture that buys and trains premium horses like Rafalca, a majestic mare who has pranced her way to a number of championships.

The Romneys are passive investors in the venture, so the loss didn’t do much to lessen their tax burden last year. That burden, however, was astonishingly light to begin with for one of the wealthiest presidential candidates in generations.

Here's the .pdf of Rmoney's 2010 tax report. The relevant figures are on page 151.

[Beachlife!]

Is that the $49 deduction?

[Chloe]

Yes. Not tax deductible, but losses.

[jimmy101_again]

So they got to remove $77K from their taxable income based on the business loss. Lets see, since Romney probably has zero regular income that means he probably avoided capital gains taxes on $77K of that kind of income. Isn't capital gains taxed at 17%? 17% of $77K is about $13K.

It really wouldn't be a tax break per se, instead they recover some of the taxes they already paid on the $77K. Isn't it basically as if they never had the $77K and hence never had to pay taxes on it?

[Beachlife!]

The allowable deduction was $49, not $77k.

[Chloe]

Yes, as Mateus' article points out, they weren't able to deduct much of it from their tax bill, but they still spent almost twice as much on their dressage horses as the average US worker makes in a year.

[GenYus234]

They lost almost as much. They could have spent $1.5 million and got $1.43 million in revenue.

[Chloe]

Right, lost, not spent.

[snopes]

Comment: Facebook post: "Stay at home mom Ann Romney's tax deductions for
her dressage horse exceeded the average American median income". I am not
familiar with any section of the IRS code which allows one to deduct their
horses when used in the context of a hobby, so this seems suspect to me.