This year's Kentucky Derby has come and gone, but Churchill Downs is still wrangling with Uncle Sam over a $72,530 tab from five years ago.
Churchill Downs Inc. filed a petition May 13 asking the U.S. Tax Court in Washington, D.C., to overturn an IRS decision seeking additional taxes for 1994-95 after denying the racetrack $211,528 in deductions, half the amount the company spent on Derby entertainment.
In its petition, Churchill claims it is entitled to write off half the cost of the dinners, parties and other entertainment it used to promote the Derby.
"They each involve multiday entertainment experiences that culminate with the actual races," according to the petition. "Petitioners are in the entertainment business and their 'product,' in part, consists of the delivery of such unique entertainment experiences."
Entertainment expenses Churchill is claiming include $7,500 for a press breakfast; the Sport Kings Gala for $114,375; a Derby winners party for $17,500; the Breeders' Cup press party for $116,000; sports event tickets for $4,877; a $21,885 brunch; and a buffet at the U.S. Senate Restaurant in Washington for $538.
Paul J. Cox, a Louisville tax attorney for the company, wouldn't comment. An IRS spokesman said the agency does not comment on pending tax cases.
The IRS notice was issued Jan. 29, and the agency has 60 days to respond to Churchill's May 13 petition. If the IRS and Churchill Downs fail to negotiate a settlement, the case will go to trial before a tax court judge.
Jerry Moskal is a writer in Washington, D.C.
