Federal legislation extending payroll tax deductions did not extend the Section 179 expense deduction or 100% bonus depreciation, the American Horse Council (AHC) reported Jan. 3.

The Section 179 expense deduction returned to $125,000 for 2012 and phases out dollar-for-dollar once purchases of depreciable property reach $500,000. The deduction applies to horses, farm equipment, and other depreciable property used in a business, and permits a horse owner or breeder to write off up to $125,000 in assets purchased and placed in service in one’s horse business in 2012.

The expense allowance for 2010-11 was $500,000 and phased out after purchases exceeded $2 million.

The AHC said bonus depreciation returned to 50% for 2012. It allows horse owners and other horse businesses to write off 50% of the cost of new capital assets–including horses–when purchased and placed in service in 2012