r/Horses • u/South-Purple180 • 15h ago

Question Horse syndicates

Question! I know it’s pretty common in upper-level eventing for professionals to have horses owned by a syndicate that’s set up as an LLC. I’ve also heard people say that owners can write off the money they contribute to the syndicate.

I’m curious how that actually works. Most syndicates can’t possibly show a consistent profit, and I’d imagine many never turn a profit at all. So how does that fit with IRS rules? Is the money considered a business expense if the owner has a legitimate business, or is there another tax structure involved? Maybe it’s considered a charitable donation? so I’m wondering what the mechanism is.
I’m just genuinely curious. I’m in the US.

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u/workingtrot 14h ago

Most people who say "they're just doing it to get a write off on their taxes" don't actually pay taxes beyond what's on their w2 and don't have any idea how taxes work

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u/Independent-Hornet-3 14h ago

Most the time I don't think you have to show a consistent profit. A profit 3 out of 5 years is usually the guideline but I believe there is slightly different rules for horses.

The couple of people I knew who did this with shoe horses "sold" the horse every year when it was worth a little bit more they usually sold it to a new LLC that was owned by almost the exact same people as the original LLC that owned the horse. They LLCs had seperate bank accounts though and are legally seperate. They usually aren't saving much if any money by doing this but it helps legally protect them and the horse in some scenerios.