WASHINGTON -- Polo ponies, vineyards in Napa Valley and racing yachts are some of the trappings of the ultra-wealthy all over the world. But in the U.S., elaborate tax structures can also make such luxuries into small business assets for their owners.

The question of who, or what should qualify as a small business shot back into the spotlight Wednesday night during the first presidential debate of the 2012 election. Sparring over their respective tax plans, President Barack Obama scored a point when he said, "Under Gov. Romney’s definition, Donald Trump is a small business. I know Donald Trump doesn’t like to think of himself as small anything." According to HuffPost's Zach Carter, this is true.

Romney, following Republican tax messaging going back several years, classifies anyone recognizing business income on their individual tax returns as a "small business" -- including people like Donald Trump, who recognize business income from book sales and speaking fees.

But self-promotion is far from the only thing the very wealthy have been known to designate as a "small business" at the same time as they enjoy it on a personal level.

For that, look no further than Republican presidential nominee Mitt Romney's own Olympic dressage horse, Rafalca, which his wife, Ann Romney, co-owns. Officially, Romney's share of the horse is owned by the small business entity the Romneys set up for just this purpose, called Rob Rom Enterprises. And in 2010, they claimed on their taxes to have lost $77,000 on the "business."

So how does a multi-millionaire like Romney get to call his horse a business? It comes down to the potential for future income that some horses offer -- a case that's easier to understand in the context of racehorses. If a racehorse is highly successful, it's a good bet that that their progeny will be successful, too, and could return a significant profit for the owners, both in breeding fees and race winnings.

Ann Romney has called dressage, "the passion of my life," but the difference between a passionate hobby and a small business is a serious one, and the IRS is charged with enforcing it. For wealthy people, however, who can pay hundreds of thousands of dollars a year to board, train, and outfit a competition-level horse, it's tempting to conjure up ways that the horse might make some of that money back, thereby qualifying the hobby as a small business.

Earlier this year, Rafalca's rider, Jan Ebeling, told Bloomberg Businessweek, “I hate to talk about a horse as a product, but basically Rafalca is the product. The plan is to have a horse do well. And then use it for breeding. In this case you would have babies and hopefully be able to market the babies." Rafalca didn't win any medals at the London Olympics, and at 15 years old, the mare is well past her breeding prime. Nevertheless, what the Romneys are doing in perfectly legal.

Want to see some more luxuries that wealthy people can legally classify as small businesses and small business expenses under certain conditions? Click through our slideshow below.

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  • Buying A Vineyard

    A vineyard, like this one in Bad Vöslau, Austria, can be a <a href="http://melodymontero.com/vineyard_luxury/vineyard" target="_hplink"> worthwhile investment</a> for passive income, as well as a beautiful and luxurious place to visit. Like a sport horse, the owner doesn't necessarily manage the property or the winemaking, but pouring the output of your own vineyard at a dinner party is major status symbol among the ultra-wealthy.

  • Investing in Art

    Art is a complicated investment, but what matters to the IRS is whether a person is a dealer, collector, or investor. The best <a href="http://kyoffelaw.com/blog/2011/09/art-as-investment-tax-considerations-for-collectors-dealers-artists-and-investors/" target="_hplink">tax advantages</a> generally go to investors.

  • Corporate Yachts

    Corporate yachts can be a major tax write-off for both small and large businesses, namely because expenses and depreciation for boats are incredibly high. According to the <a href="http://www.seattlepi.com/business/article/Small-and-large-companies-use-boat-write-offs-1159120.php" target="_hplink">Seattle Post-Intelligencer</a>, owners of corporate yachts can "subtract the cost of mooring, fuel, crew salaries, insurance, legal fees, financing, repairs, new equipment and other expenses from company earnings at tax time. The vessel can be depreciated over a period of years, further lowering corporate income." (AP Photo/Rick Rycroft)

  • Sport Horses For Profit

    Ann Romney has called dressage, "the passion of my life," but the difference between a passionate hobby and a small business is a serious one, and the IRS is charged with enforcing it. For wealthy people, however, who can pay hundreds of thousands of dollars a year to board, train, and outfit a competition-level horse, it's tempting to conjure up ways that the horse might make them some of that money back, thereby qualifying their hobby as a small business. Here, Ebeling rides Rafalca in the equestrian dressage competition at the 2012 Summer Olympics. (AP Photo/David Goldman)

  • Expensive Sports As Business Expenses

    Losses on horses can also be classified as business expenses for certain businesses that aren't horse related, as long as a person can prove that their participation in the sport materially helps their business. This standard can apply to <a href="http://www.equinechronicle.com/community/tax-matters-treating-two-activities-as-one-for-tax-purposes-2.html" target="_hplink">all types</a> of professions that deal with ultra-rich people, for instance, wealth management, interior design, or estate planning.

  • Corporate Travel To Luxury Resorts

    A small business can <a href="http://www.nolo.com/legal-encyclopedia/top-tax-deductions-small-business-30176.html" target="_hplink">deduct travel expenses</a>, which for the ultra-wealthy, often mean ultra-ritzy destinations, like Aspen, Colo., and Davos, Switzerland. The expenses of flying Mitt Romney's dressage horse and its owners and riders to London for the Olympics in 2012 were a business expense.

  • Vacation Homes As Rental Properties

    Vacation homes like these on Nantucket, an island off the coast of Massachusetts, can also be turned into investments with <a href="http://finance.yahoo.com/news/tax-breaks-pitfalls-renting-second-070036635.html" target="_hplink">tax benefits</a>. The bigger the home, the bigger the benefits.

  • Collections of Classic Cars

    Antique cars can also be collected, like art, but the tip-top of the market is smaller and less structured. Cars have the added drawback of depreciation, so they're a complicated investment.



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