When something sounds too good to be true, it usually is, especially if the promised benefits include a substantial tax break. On October 26, in federal district court in Utah, David Plummer, Spencer Plummer, and Terry Green entered guilty pleas on a charge of conspiracy to defraud the United States. The charge arose from a fraudulent tax shelter scheme called the "Mare Lease Program" that was marketed through ClassicStar LLC.

Tax deductions based on supposed losses generated by the leasing program were used by ClassicStar investors to reduce or eliminate taxes on other income. Some $500 million in fraudulent deductions allegedly bilked the government out of $200 million in taxes. The guilty pleas wrap up one part of the ClassicStar confusion, but others remain, including bankruptcy proceedings and more than two dozen civil lawsuits filed in six states.

More problematic for everyone not directly involved is that the ClassicStar affair reinforces two persistent stereotypes that make surviving in the horse business even more difficult. Common perceptions are, first, that everyone who owns horses is wealthy and on the prowl for a tax shelter, legitimate or otherwise, and, second, that all tax deductions generated by horse activities are shady. The former makes the horse industry fair game for state and federal legislators who are looking for people with deep pockets to plug budget holes. The latter makes it far more difficult for individuals in the horse business to claim legitimate tax deductions in the face of an IRS audit.

Neither stereotype is accurate