TaxProf Blog

Editor: Paul L. Caron, Dean
Pepperdine University School of Law

Thursday, February 21, 2013

Tax Court Denies Former NFL Star Bill Romanowski's Horse Breeding Expense Deduction

RomoThe Tax Court yesterday (1) upheld a $4.75 million tax deficiency against former NFL player Bill Romanowski and his wife and denied the couple's claimed deductions for expenses related to their horse-breeding activity; and (2) denied $950,000 in accuracy-related penalties on the ground that the couple reasonably relied on the advice of Rodney Atherton, a former tax partner at Greenberg Traurig. Romannowski v. Commissioner, T.C. Memo. 2013-55 (Feb. 20, 2013).

Bloomberg, Romanowski Barred by Court From Deducting Horse Costs:

The expenses incurred by the Romanowskis stemmed from an investment in a Kentucky-based horse-breeding business conducted by ClassicStar LLC, whose operators pleaded guilty in 2009 to conspiring to defraud the U.S. by running an illegal tax shelter.  ...  The Romanowskis learned of ClassicStar through Rodney Atherton, an attorney for Greenberg Traurig LLP, which represented the horse breeder at the time on certain tax matters, according to the tax court ruling. ...

The Romanowskis leased mares owned by ClassicStar, which provided boarding and care for the horses and bred them to stallions. The couple “did not have significant interaction with their mares or foals and delegated essentially all the breeding work to ClassicStar,” Goeke wrote. The Romanowskis “did not expect their (mostly hypothetical) foals to appreciate in value to the point where they would recognize a profit,” he said.

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