Subsidized hobbies and chameleon corporations

Internal Revenue Code Section 183 (Activities Not Engaged In for Profit) says, for an activity that consists of breeding, showing or racing horses, it must show a profit in at least two years of any consecutive seven-year period if you want to fully deduct your losses. If you can't show two years of profit the IRS considers what you're doing to be a hobby and your deductions are limited.

"Chameleon corporation" doesn't exist in the IRS lexicon; I stole it from the Federal Motor Carrier Safety Administration. The FMCSA can "put your company out of service," which is a nice way of saying they can shut you down, for a pattern of gross and repeated safety violations--if they inspect your trucks 50 times and find bad tires on them in 45 inspections, say. Because the FMCSA doesn't have enough people to really research every new carrier's application for operating authority, some of these "put out of service" carriers will file a new carrier application with a different company name on it, get authority and go back to hauling freight. The penalty is very stiff if you get caught, but they don't catch many of them.

Mitt W. Romney's tax return for 2010 says he deducted a $77,000 loss on his wife's dressage horse. Is it possible that Romney could be holding his horses in a chameleon setup--changing the name of the holding company, officers therein and so forth--to conceal the fact he's fraudulently using dressage horses as a source of tax loss? Or that he has other hobby activities in chameleon corporations to get his tax bill down even lower?

The sad truth is, if the full extent of Mitt W. Romney's business dealings ever gets out he's going to be banging a tin cup against the bars of his cell, and he wants to keep that from happening.