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RodeoTax.com was featured in Today's Horse Magazine
Ernest Lee recently represented a Taxpayer before the Alabama Tax Tribunal. "The Taxpayers' two teenage children rode horses owned by the Taxpayers in various rodeos during the years in issue, and the Taxpayer deducted rodeo entry fees, related travel and clothing expenses, and various other rodeo-related miscellaneous expenses incurred in those years." The Alabama Department of Revenue "disallowed a portion of the expenses as personal in nature..."
The Department concede[d] in this case that the Taxpayers' horse-related activities were a profit-motivated business. Rather, the issue is whether the rodeo expenses relating to the Taxpayers' children constituted deductible ordinary and necessary business expenses, see Code of Ala. 1975, §40-18-15(a)(1 ).
After a hearing on the issue, the Court stated that, "The evidence is undisputed that the Taxpayers' children participated in the rodeos during the years in issue to promote the Taxpayers' business by showing that the horses were "kid safe." In substance, the children were advertising the Taxpayers' horses and the Taxpayers' training abilities. Under the circumstances, the expenses relating to the children's participation in the rodeos were ordinary and necessary business expenses, and thus deductible."