The House voted 234 to 193 on Tuesday evening to pass legislation that continues 100 percent small business bonus depreciation through 2012. Known as the “Middle Class Tax Relief and Job Creation Act of 2011,” H.R. 3630 also extends the current payroll-tax cut and the duration of unemployment insurance benefits.
Sales officials and others within the Thoroughbred industry identified 100 percent bonus depreciation as a factor in the increased business activity at 2011 yearling sales. Bonus depreciation encourages investment by allowing taxpayers to write off the entire cost of new qualified depreciable property in the year purchased, if they put the property in service that same year. Examples of qualified property include yearlings and new farm equipment.
The Congressional Budget Office (CBO) and the Joint Committee on Taxation (JCT) estimate that the continuation of 100 percent bonus depreciation through 2012 will cost the Treasury $6.005 billion over 10 years. Thousands of businesses nationwide, including those outside of horse racing, stand to benefit from this investment incentive.
The Senate is expected to vote on the bill later this week and the outcome is uncertain. Without a change by Congress, bonus depreciation drops to 50 percent in 2012.