Upon retiring from successful careers as business consultants, Mr. and Mrs. Hound decided to enter the dog breeding business. To that end, they started Regal Beagle Breeders and purchased four beagles, three females and one the son of a grand champion. The Hounds made approximately $25,000 of improvements to their home where they carried on the breeding business. They claimed these expenses as business expenses.

The Hounds also attended 30 dog breeding seminars and attended 50 dog shows. To get to the dog shows, the Hounds purchased a recreational vehicle for $75,000 so that they could travel in comfort with the dogs. The RV was used exclusively for business purposes and they deducted the cost of it as a business expense. The Hounds did not maintain a very sophisticated accounting system. They kept a log where they periodically recorded revenues and expenses. However, the entries in the log did not lend themselves to analysis such as periodic profitability or costs per dog. The Hounds paid the bills for the business out of their personal bank account and listed their personal cellphones as the numbers for the business on their business cards.

The Hounds claimed the losses from Regal Beagle on their personal 2018 tax return.

Question :

 Were they entitled to these deductions?

Why or why not? Justify your answer by citing relevant Internal Revenue Code sections, regulations and at least three cases.