Economic Stimulus Act Gives Breeding Incentives

EQUINE INDUSTRY TO BENEFIT FROM THE ECONOMIC STIMULUS ACT

Act Passes and Creates MORE Breeding Incentives

Benefits in the Economic Stimulus Act for Horse Industry

Washington, DC -February 14, 2008 - President Bush signed into law the Economic Stimulus Act on February 13. The bill is intended to provide a jump-start to the lagging U.S. economy.

“The new law includes two tax incentives that would allow a much bigger write-off for horses and other depreciable property purchased and placed in service during 2008,” said Jay Hickey, President of the American Horse Council. “This should provide an additional incentive for people to invest in more horses for racing, showing and breeding as part of their business activities.”

The first incentive would increase the so-called Section 179 expensing allowance for horses purchased and placed into service in 2008 from $128,000 to $250,000. This expensing allowance also applies to farm equipment and most other depreciable property. Once total purchases of horses, and other eligible depreciable property, during 2008 reach $800,000, the expense allowance goes down one dollar for each dollar spent on eligible property over $800,000.

“The horse industry almost lost the Section 179 expense deduction in 1996. The House of Representatives passed legislation taking this deduction away from the horse industry,” said Hickey. “But we were able to convince the Senate to remove this restriction before passing the final bill and the deduction was preserved. It was worth $17,500 then. Over the years it has been increased and will now go up to $250,000 for 2008. That is a real benefit to horse owners.”

To illustrate the expensing allowance, assume a horse business purchases $750,000 of depreciable property in 2008, including $650,000 for horses. That business can write off $250,000 on its 2008 tax return and depreciate the balance. If instead, purchases were $900,000, the expense allowance would go down by $100,000. In either case, the amount of the purchases not expensed may also be eligible for bonus depreciation, which is reinstated for 2008 in the new tax stimulus package.

The second incentive brings back 50% first-year bonus depreciation for horses and most other depreciable property purchased and placed in service during 2008. “Bonus depreciation was first passed in 2002 as a way to stimulate the economy. It phased out at the end of 2004,” noted Hickey. “It was a benefit for the industry then and it should be again.” It does not apply to property that has a depreciation life of over 20 years.

Also, as was the case when bonus depreciation was available in 2003 and 2004, the property must be new, meaning that the original use of the horse or other property must begin with the purchaser for the property to be eligible. “Original use” means the first use to which the property is put, whether or not that use corresponds to the use of the property by the purchaser. “There is no limit on the amount of bonus depreciation that can be taken, as there is with the expense deduction,” noted Hickey.

To illustrate bonus depreciation, assume that in 2008 a business pays $500,000 for a colt to be used for racing and $50,000 for other depreciable property, bringing total purchases to $550,000. The young colt had never been raced or used for any other purpose before the purchase. The business would be able to expense $250,000, deduct another $150,000 of bonus depreciation (50% of the $300,000 remaining balance), and take regular depreciation on the $150,000 balance.

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AHC president Jay Hickey "approves and applauds" the provisions of the act that will benefit the equine industry. Hickey says it will, " provide additional incentives for people to invest in more horses for racing, showing and breeding as a part of their business activities." Friends of Equines says, "woah, what about all the "unwanted" horses? Shouldnt we be working on a way to solve that particular problem before creating any more breeding incentive programs? What is wrong with this picture? Something is definately not right here. Do we really need or even want more breeding incentives, at least without a safety-net provision for the industry cast-offs? Now our governemnt is in the "horse-breeding incentive" business also, without a care to the industry "unwanteds." Perhaps our government wants to increase the number of "unwanted" horses, as they are well aware now of their marketability. You just got to know that the USDA would love nothing more than to be the authority for the horse-slaughter business in America...and people we are heading toward that "goal" if we dont get the Equine "Industrymen" to take the "unwanted" horse problem seriously. IF there is an "unwanted" horse problem it is they who created it and it is they who should fix it. Everyone who profits off the industry should be made to pay into a mandatory Equine Re-Homeing or Retirement Fund. The problem is, according to those "in the know" like Marsha Naify, chairman of the Thoroughbred Owners of California , owners and breeders "just dont want" to give. (See article, "CHRB Supports Owners Plan for Retired Racehorses," by Jack Shinar, pub. in Bloodhorse News, July 20, 2007) Sound a bit like the Big-Oil Barons or the World Bank and/or Federal Reserve? Not one dime of their billion dollar profits do they want to give to help correct a problem that they mostly created. Why dont they want to give, even just a little? George Soros, http://www.soros.org/about/bios/a_soros global financier, economists & philanthropist said it all when asked during a House Sub-Committe Meeting on economics, last spring,.....the question was put to him as to why the World Bank and the Federal Reserve refuse to help out our Nations ailing economy,....his answer was shocking but true; He answered,.."We all are addicted to money,...we are like drug addicts and money is our fix. We never have enough and what we do have we want to keep." Guess nobody ever told Ole George that addiction is a disease, and a "less then desirable" human "character flaw" and that there is TREATMENT and a CURE for it. Maybe its time for some rehab for the greedy sobs'.