During 2013 horse owners, breeders, and businesses enjoyed a number of favorable tax provisions that have now reverted to lower levels or expired.
The American Horse Council (AHC) reported Jan. 13 more than 60 tax provisions expired; some applied to all businesses, including the horse industry, and one specifically applicable to racehorse owners.
While the Tax Extender Act of 2013 has been introduced to extend various tax provisions, legislation will not be passed quickly or easily, the AHC said. In addition, the AHC said any extension is affected by the desire in Congress to deal with broader, fundamental tax reform involving much of the current tax code.
For the last few years, the "Section 179 business expense deduction" was set at $500,000, meaning anyone in the horse business, or any business for that matter, could immediately depreciate up to $500,000 of the cost of any investment in business assets, including horses.
The deduction was reduced dollar-for-dollar once investment in all one’s business activities hit $2 million. It applied to horses and other depreciable property purchased and placed in service in the horse business.
The provision was not extended by Congress and has reverted to $25,000 for 2014.
Anyone in a business could also write off up to 50% of new property purchased and placed in service in 2013, including assets used in the horse business, such as horses and other equipment. The provision, known as "bonus depreciation," was restricted to new assets, which meant the first use of the horse or other property had to begin with the taxpayer.
The provision also wasn