The U.S. Tax Court ruled that a married couple’s miniature donkey breeding activity was conducted with a profit motive. The IRS had earlier determined it was a hobby and the couple was liable for taxes and penalties for the two tax years in which they claimed losses of more than $130,000. However, the court found the couple had a business plan, kept separate records and conducted the activity in a businesslike manner. The couple operated the venture with the intent of turning it over to their adult daughter to help supplement her income. The court stated they were “engaged in the breeding activity with an actual and honest objective of making a profit.” (TC Memo 2021-140)