From NTRA
WASHINGTON, D.C. (Nov. 29, 2018) — House Ways and Means Chairman Kevin Brady (R-TX) released bipartisan tax and oversight legislation earlier this week that includes, among its wide range of provisions, three-year depreciation for racehorses. Under the proposed package, three-year racehorse depreciation would return for 2018 and grant taxpayers the option to depreciate all racehorses over a three-year period.
Three-year racehorse depreciation was most recently available to the industry in 2017 but Congress did not renew it for 2018 as part of the Tax Cuts and Jobs Act (TCJA) passed in December 2017. The TCJA did include 100% bonus depreciation and a $1 million Sec. 179 expense allowance for qualified depreciable property, two important investment incentives that lessened the need for three-year depreciation in many cases. However, three-year depreciation continues to be a beneficial option for many racehorse owners, especially racing partnerships with multiple passive owners, as it better aligns deductions with corresponding income opportunities on an annual basis.
The presence of three-year depreciation language in Rep. Brady’s legislation is the result of the NTRA federal legislative team’s efforts to advocate for this accelerated schedule, which dates back to its inclusion in the 2008 Farm bill. If the Brady legislation advances in Congress, the NTRA expects the bill to include the depreciation provision.