Final answer:
The presumptive rule of § 183 in business taxation determines whether an activity involving horses is considered a business or a hobby for tax purposes. If a profit is made in at least two out of seven consecutive years, the activity is presumed to be a business.
Step-by-step explanation:
The subject of this question is business. More specifically, the question is related to the presumptive rule of § 183 in business taxation. This rule determines whether an activity involving horses qualifies as a business or a hobby for tax purposes.
The presumptive rule of § 183 states that if an activity involving horses generates a profit in at least two out of seven consecutive years, it is presumed to be a business rather than a hobby. This means that the owner of the activity can claim business-related deductions and benefits.
For example, if a person participates in horse racing or breeding and earns a profit in at least two out of seven consecutive years, they can qualify for tax deductions related to the horse activity, such as expenses for feed, training, and transportation.