Favorable depreciation rules and other investment incentives important to the horse racing and breeding industry expired at the end of 2013. The fate of these expired tax provisions in 2014 may be determined by the Tax Extender Act of 2013, which was filed last December by Senate Majority Leader Harry Reid (D-NV). Congress may also address these expired tax provisions in a more permanent way as part of comprehensive tax reform.
At the urging of the NTRA, Sen. Reid’s bill includes a renewal for 2014 of the three-year depreciation schedule for all racehorses which was originally enacted as part of the recently-expired 2009 Farm Bill. Before 2009, racehorses placed into service at 24 months of age and younger were depreciated over a seven-year period. This seven-year schedule will return unless action is taken in 2014.
The Tax Extender Act of 2013 also includes language to renew for 2014 the expense allowance which permitted businesses to write off up to $500,000 of qualified depreciable property and 50% bonus depreciation which is important to those purchasing new property such as yearlings or farm equipment.
Three-year depreciation is a top legislative priority for the NTRA. Thus, we will continue to press for its inclusion in the Tax Extender Act.