From the National Thoroughbred Racing Association
House and Senate conferees for the 2007 farm bill announced May 8 they had approved a final version of the bill, which includes legislative language to amend the depreciation schedule for race horses. The final version of the farm bill is expected to pass both houses and be sent to the president for approval.
Under current tax law, race horses are depreciated over either three or seven years, depending on their age when "placed in service." A horse is generally deemed to be placed in service when it begins training. Horses over the age of 24 months (from date of foaling) when placed into service are depreciated over three years; otherwise, they are depreciated over seven years.
Legislation contained in the 2007 Farm Bill allows an owner to recover his or her costs over the period of time that the horse is likely to race.
"This provision will provide enormous economic incentives to the horse racing and breeding industry and also bring more fairness to the tax treatment of one of the most important assets in our industry--the race horse," said Alex Waldrop, president and CEO of the National Thoroughbred Racing Association. "A simplified, uniform depreciation schedule for race horses will help keep buyers in the market for racing bloodstock and improve the overall economics of horse racing and breeding.
“The NTRA and the whole horse industry owe a significant 'thank you' to Kentucky's senior senator Mitch McConnell for his steadfast leadership on this important issue, which is critical to Kentucky's signature agribusiness. We also thank Senator Blanche Lincoln, Rep. Dennis Cardoza, and other members of congress who supported this legislation."
According to "The Economic Impact of the Horse Industry on the United States," produced in July 2005 by Deloitte Consulting, the horseracing industry carries a total economic impact of $26 billion, $20.7 billion of which is from Thoroughbred racing. There are nearly 845,000 racehorses in the United States and the racing industry supplies more than 380,000 jobs.
