Members of the U.S. Senate and the U.S.
House of Representatives voted today to override a
Presidential veto of the 2007 Farm Bill exercised by
George W. Bush yesterday. As a result the 2007 Farm Bill
is now law, and it includes the Equine Equity Act, a
provision that amends the depreciation schedule for
racehorses to a uniform three years.
Under previous tax law, racehorses were
depreciated over either three or seven years, depending
on their age when “placed in service.” A horse is
generally deemed to be placed in service when it begins
training. Racehorses over the age of 24 months (from
date of foaling) when placed into service are
depreciated over three years; otherwise, they are
depreciated over seven years. In a given crop of horses
that make it to the track, about half will start as
two-year-olds and the rest will start as
three-year-olds.
Most racehorses (except geldings) are
off the track by age five, making a seven-year
depreciation schedule anachronistic. Legislation
contained in the 2007 Farm Bill allows an owner to
recover his/her costs over the period of time that the
horse is likely to race.
“This crucial piece of legislation
finally provides fair and equitable tax treatment to the
Thoroughbred
industry,” said Alex Waldrop,
President and CEO of the National Thoroughbred Racing
Association (NTRA). “This day is the culmination of
many years of effort on Capitol Hill by the NTRA
legislative team, and we thank Sen. Mitch McConnell, who
secured inclusion of the racehorse depreciation measure
in the Farm Bill, for his strong support of Kentucky’s
signature industry.”
The 2007 Farm Bill also contains two
other provisions, promoted by the NTRA, to aid horse
owners.
These provisions would make horse
breeders eligible for the first time for emergency
federal loans following a disaster. Further, the bill
includes a new permanent disaster assistance program
that will provide relief funds to farmers and ranchers
who suffer losses in areas that are declared disaster
areas by USDA. This additional disaster program will be
available to horse owners.
The NTRA will be holding tax seminars
this year around major Thoroughbred sales, explaining
the new law as well as legislation changing the terms
for the Section 179 expensing allowance and for bonus
depreciation that was passed earlier this year as part
of President Bush’s Economic Stimulus Act.
According to "The Economic Impact
of the Horse Industry on the United States,"
produced in July 2005 by Deloitte Consulting LLP, the
horseracing industry carries a total economic impact of
$26 billion, $20.7 billion of which is from Thoroughbred
racing. There are nearly 845,000 racehorses in the
United States and the racing industry supplies more than
380,000 jobs.
The NTRA is a broad-based coalition of
horse racing interests consisting of leading
thoroughbred racetracks, owners, breeders, trainers and
affiliated horse racing associations, charged with
increasing
the popularity of horse racing and
improving economic conditions for industry participants.
The NTRA has offices in Lexington, Ky., and New York
City. NTRA press releases appear on the NTRA web site,
NTRA.com.
