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Attention Horse Owners:  President signs tax bill with horse benefits:  A bi-partisan tax bill, with multiple provisions favorable to the horse industry, has been passed by Congress.

Here are a few things you should know:

The bill, called the Protecting Americans from Tax Hikes Act of 2015, includes several provisions important to the horse industry and championed by the American Horse Council.  All of these provisions apply to horses and other assets used in a horse business:

  • The benefits include making all the race horses depreciable over three-years. The ability to immediately expense or write-off up to $500,000 in depreciable business property and bonus depreciation, which allows the deduction of 50% of the cost of new property purchased and placed in service.
  • The bill reinstates the three-year depreciation schedule for all race horses for all of 2015 and 2016 and it is automatic for all race horses placed in service in 2015 and 2016.
  • The provision allows horse owners to begin training their race horses when they think best and take advantage of the shorter three-year period.
  • The bill also raises the so-called Section 179 business expense deduction back to $500,000 and makes it permanent, effective January 1, 2015. This allows anyone in the horse business to immediately depreciate up to $500,000 of the cost of any investment in industry assets, including horses, fences, equipment, tack, trucks, etc. purchased and placed in service in 2015 and 2016.
  • The bill restores bonus depreciation for qualifying new property; including assets used in the horse business, such as yearlings and other equipment, purchased and placed in service during 2015 through 2019.
  • This end-of-year legislative actions reauthorized two programs important to recreational riders, the 1)Federal Highway Administration’s Recreational Trails Program (RTP) and 2)The Land and Water Conservation Fund (LWCF):
    • RTP is reauthorized for the next five-years and provides $85 million annually for the program which:
      • Provides funding directly to the states for recreational trail users and has greatly benefited equestrians
      • LWCF is reauthorized for three-years, and provides funds and matching grants to federal, state, and local governments for the acquisition of land and water for recreation and protection of natural resources and helps provide equestrians with increased recreational trail riding opportunities
  • The USDA revises export regulations pertaining to the exportation of livestock, including horses, from the United States, effective February 19, 2016.
  • Three key changes impacting horse exportation:
    • Pre-export inspection of horses at facilities, other than an export inspection facility associated with the port of embarkation
    • Several requirements for export health certifications, tests, and treatments have been removed from the regulations and instead direct exporters to follow the requirements of the importing country regarding processes and procedures
    • Under certain circumstances, the revisions replace the specific standards for export inspection facilities and ocean vessels with the new performance standards increasing the options available to the industry at large
  • All changes will provide exporters of horses with more flexibility in arranging exportation of horses.

Marcia A. Jacobowitz is senior counsel with the firm and practices real estate, business and equine law.  She can be reached by phone at 866-303-9595 toll free or 845-764-9656 and by email.

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