Often enough taxpayers who are audited in connection with their farming or livestock activities are questioned on the issue known in the tax law as the “material participation test.” Under this legal test, you are permitted to deduct losses against outside salary and wages only if, among other things, you “materially participate” in the activity. Many duties, such as training of animals, showing of show horses and racing of race horses, are delegated to qualified experts, and sometimes the IRS will question the validity of your own participation in decisionmaking, in an effort to say you have failed to meet the material participation test.