Federal Taxation AF 450
CCH Demonstration
Dr. Julia M. Camp
Facts
Assume your client, Dr. Smith, is a dermatologist who lives on a farm in Virginia. He owns
a string of thoroughbred racehorses. Dr. Smith enters some of his horses in races around the
country, and has won a few modest purses. Horse racing is an expensive undertaking. Costs
associated with the horses far exceed race winnings, receipts from sales, and breeding fees. Dr.
Smith asks you to determine the tax treatment of the horse racing activity.
As we will learn in class, all receipts are gross income, unless otherwise provided.
Expenditures are not deductible unless specifically permitted. For activities classified as a trade or
business, ordinary and necessary expenditures are deductible to the extent they are reasonable in
amount. "Hobby losses" (expenditures for a hobby greater than its gross income) are not
deductible. Your goal is to find out how to determine if an activity is a hobby and what limitations
are associated with the related expenditures.
Getting Started
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Launch your Internet browser.
Go to the library website at: http://www.lib.umb.edu/ and click on “Databases and Indexes”
under “Electronic Resources.”
Scroll down and click on “CCH Tax Research Network”
Click on “Enter” under the login section (if you are accessing the site from off-campus, you
will be prompted for your last name and library barcode. If you do not have a barcode, ask
for one at the front desk of the library).
After you click “enter” you will see the main welcome screen.
Click on the “Federal” Tab.
Keyword Search
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At the top of the screen is a search bar. When searching, you may check off any of the
boxes of the list of resources on the page, divided into several categories. If your search is
to focus on a particular area of authority (such as the Code and Regulations) you would click
on the box preceding the area in which to search. For this Exercise, we will search all
primary and CCH Explanations and Analysis. Click on the box after CCH Explanations
and Analysis and the box after Primary Sources.
On the Search line, enter the following keywords: hobby losses
Click the button labeled Search.
Search Results
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This search identified 1564 documents. These documents all have both the word "hobby"
and the word "losses" somewhere in them. However, the words are not necessarily adjacent.
We will narrow our search. “Hobby losses” is really a phrase and we want to find these two
words together. We can refine the search by putting quotes around the phrase.
At the top of the screen, in the search bar, change the words to “hobby losses.” Click on
Search.
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Federal Taxation AF 450
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CCH Demonstration
Dr. Julia M. Camp
Under the Search bar is a drop down menu that reads “display by document.” Change this
to “Display by table of contents – hits only.”
Click on 2007 US Master Tax Guide. This will open up a submenu. Click on Guidebook,
2007 USMTG, Losses (Chapter 11). This will open another submenu. Click on
Guidebook, 2007 USMTG, Hobby Losses. The US Master Tax Guide (secondary source)
is like a tax encyclopedia. General Explanations and many references to primary sources are
found here.
Cross-References to Related Materials
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Notice that within a document, keywords are highlighted in yellow.
Note the reference in blue to Code Sec. 183. Click on this reference. You see the list of this
code section. Click on the top document (IRC 2007-Code Vol. Sec 183…). Sec. 183 is the
general rule on the deductibility of expenses for an activity not engaged in for profit. Note
in particular subsections (c) and (d). This Code section is an important primary source for
our issues.
Notice the set of blue navigation buttons on the screen just below the document heading
(§183 Activities not engaged in for profit). Click CCH Explanations. The list at the left of
the screens shows all the CCH editorial explanations that reference this section. If items in
this list appeared useful, you would click on them.
Use your back browser button to go back to the code section text. Click Regulations. This
list takes you to the Treasury regulations for this code section, another important primary
source.
Use your back browser button to go back to the code section text. Click Committee
Reports. This list takes you to the Congressional Committee Reports for the legislation
enacting this section.
Use your back browser button to go back to the code section text. Click Current
Developments. This list contains the most current references to relevant source documents.
Each item takes you to a list of additional documents that can be scanned and selected as
appropriate.
Use your back browser button to go back to the code section text. Click CCH Annotations.
The list on screen shows topical headings in which court cases and IRS rulings related to
Sec. 183 can be found. In this long list, a topic relates directly to horse racing, breeding, or
showing (2007FED ¶12,177.40). Click on the link. While the explanatory paragraph
associated with the Annotation is secondary authority, the court case or IRS ruling to which
it relates is primary authority. Exploring these items is an excellent way to find primary
authorities.
Many cases are listed in this annotation.
You decide to read H. Faulconer. Click the citation 84-2 USTC ¶9955. Which appears
about seventh in the list.
Viewing a Judicial Opinion
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You are now in the Faulconer case. At the top, under the search bar, notice the button
labeled Check Citator. Pressing this button displays a list of all cases with the name
Faulconer. Click on Check Citator.
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Federal Taxation AF 450
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CCH Demonstration
Dr. Julia M. Camp
Click the first case listed, with the citation 84-2 USTC ¶9955; 748 F2d 890 . This is the case
we have opened.
The bottom case in the citation list (Dec. 39,994(M); 45 TCM 1084; TC Memo. 1983-165 )
is the lower court case that gave rise to the case that you are viewing. The rest of the list
contains subsequent court cases that have cited the case you are viewing, along with
hyperlinks to the texts of those cases. The list also tells whether the citing case agreed or
disagreed with the Faulconer case.
At any point in your research, you can return to the original document list generated by your
search. Use the back button on your browser.
Return to the Faulconer case. You would read the opinion in this case and determine its
relevance to your client. The opinion would most likely refer to other primary sources. You
would examine them for their relevance to the issue(s) at hand.
Saving/Printing/Downloading Results
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When you find a document you want to keep, go into the document and click on Print
(under “store document”) button at the top of the screen. This displays the document without
links and special objects, and brings up your print menu.
You can download the file by clicking Export. This will launch the document into a MS
Word document. In the SaveAs dialog box, navigate to the folder into which you wish to
store this document or create a new folder for it, give the file a title that makes sense to you
and include the ".doc" extension, confirm that "All Files" is in the Save As Type line, and
click Save). Please note, if you export the file, you will not be able to reaccess the page by
hitting the “back” button. It may be easier to save the document in a word file by cutting
and pasting the document directly.
Exiting CCH
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To exit always click Log Off at the upper right of the screen.
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