Tax Court Says Farming Operation is a Hobby Even with Over $14 Million of Revenue

The Tax Court ruled on May 13 that a dentist in Texas who operated a deer hunting farm is a hobby but did not assess the 20% penalty.

Photo by Laura College on Unsplash

The US Tax Court ruled on May 13 in the Schwarz case that even though the taxpayer showed over $14 million of revenue over a 16-year period, that it was a hobby and therefore the losses incurred for 2015-2017 of about $3.3 million are disallowed. However, the Court agreed to abate the 20% penalty charged by the IRS saving the taxpayers about $370,000.

I have read a lot of Tax Court cases, and this might be the longest case I have ever read dealing with farms or ranches at 117 pages.