Bessenyey v. Commissioner
United States Court of Appeals for the Second Circuit
379 F.2d 252 (1967)
- Written by Jessica Rice, JD
Facts
Margit Bessenyey (plaintiff) grew up on her father’s Hungarian estate, which was used for forestry, crop and livestock cultivation, and horse breeding and training. Prior to moving to the United States, Bessenyey bred and trained Hungarian Half-breds. After moving the United States, in 1948, Bessenyey purchased nine Hungarian Half-breds to breed in hope of maintaining and increasing the breed’s profile in the United States. In 1954, Bessenyey purchased a Hungarian stallion and increased her herd to 31 Hungarian Half-Breeds by 1959. Starting in 1955, Bessenyey spent five to six months of the year in Montana breeding and training her herd. After discovering that American buyers wanted trained animals, Bessenyey increased her training efforts to make the herd more desirable. While not yet making a profit, Bessenyey began to deduct her expenses. When these expenses were disallowed by the Commissioner of Internal Revenue (defendant), Bessenyey appealed the ruling to the United States Tax Court. The tax court found that Bessenyey did not have a bona fide intention to breed and train her herd for a profit but asserted she did so as a hobby and also disallowed her from deducting her expenses. Bessenyey appealed the tax court’s decision.
Rule of Law
Issue
Holding and Reasoning (Friendly, J.)
Concurrence (Waterman, J.)
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