Laura Saunders, Why a Couple Lost a $200,000 Tax Battle Over Their Horses (Wall Street Journal, July 3, 2026)

Lots of Americans lose battles with the Internal Revenue Service. But sometimes those fights provide insights the rest of us can use to win against the IRS on similar issues. 

A recent Tax Court case about so-called hobby losses by a Nebraska couple, Keith and Rhonda Schumacher, is a good example.

The Schumachers loved breeding and training horses, and they did what many taxpayers with costly hobbies do, or would like to: They claimed their interest was a business, making net losses from it deductible against their other income.

When this strategy is successful, it can save taxpayers a lot of money. In the Schumachers’ case, the horse-related losses were largely responsible for reducing their taxes by a total of nearly $200,000 from 2017 through 2019, according to the court’s opinion. 

However, the Tax Court judge rejected the couple’s horse-related deductions. The reason, she concluded, is that they didn’t show they intended to make a profit from their horse business during the years in question.

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