The U.S. House of Representatives passed a federal bill that would extend several tax provisions favorable to the horse industry, including a three-year depreciation, on Dec. 3.
The Tax Increase Prevention Act of 2014 (HR 5771) would extend tax provisions that expired or were reduced at the end of 2013. Many of the provisions in the House bill are also in the Senate tax extender bill, which is expected to pass the Senate shortly. The bill would then be sent to President Barack Obama for his signature before the lame-duck session of this U.S. Congress ends next week.
If the bills become law, they will extend many of the provisions at 2013 levels, and make them retroactive for assets placed in service at any time in 2014.
During 2013 and before, horse owners, breeders, and equine businesses enjoyed a number of favorable tax provisions that reverted to lower levels or expired at the end of 2013, the American Horse Council said. More 60 tax provisions expired. A description of these provisions are as follows:
Section 179 Expense Deduction
For the last few years, the so-called Section 179 business expense deduction was set at $500,000. The provision allowed anyone in the horse business to 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.
This provision was not extended by Congress and reverted to $25,000 for 2014.
The House bill would extend the expense deduction at 2013 levels of $500,000, with a phase-out at $2 million, for assets, including horses, pla