Owners are required to show a profit 2 of 7 years in order to avoid being called a "hobby" by the IRS where writeoffs are limited. For owners with a large operation like Reddam a stud deal can surely allow him to show a profit for that year.
There was a prominent owner who was selling a bunch of really nice yearlings one year and I inquired with the consignor as to why they were selling when they had always been buyers or raced their homebreds. He said it was a tax strategy where they thought they were going to get a really good return on the sale yearlings and the accountants could make them out to be profitable that year.
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