Three-Year Racehorse Depreciation Extension Passed by Both Houses of Congress

LEXINGTON, Ky. (December 19, 2019) – A key provision that extends three-year tax depreciation for all racehorses through 2020 passed the Senate by a vote of 71-23 earlier today. The racehorse provision was passed by the House of Representatives on Tuesday by a vote of 297-120 as part of a larger tax package.
“We appreciate the Senate’s work to include this important provision,” said NTRA President and Chief Executive Officer Alex Waldrop. “We especially applaud the efforts of Leader McConnell, who does so much to support Kentucky’s signature industry.”

 

Uniform three-year racehorse depreciation was among numerous tax provisions across many industries that either expired at the beginning of 2018 or this year, or were set to expire as of Jan. 1, 2020. The bill reinstates the 3-year schedule for all racehorses retroactive to 2018 and through 2020.
The provision allows taxpayers to depreciate, on a three-year schedule, racehorses 24 months of age and younger when purchased and placed into service, as opposed to a seven-year schedule.

 

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.

 

Maintaining the three-year recovery period for racehorse purchases has been a top legislative priority for the NTRA federal legislative team since the provision’s initial enactment as part of the 2008 Farm Bill.

 

About the NTRA
The NTRA, based in Lexington, Ky., is a broad-based coalition of more than 100 horse racing interests and thousands of individual stakeholders consisting of horseplayers, racetrack operators, owners, breeders, trainers and affiliated horse racing associations, charged with increasing the popularity, welfare and integrity of Thoroughbred racing through consensus-based leadership, legislative advocacy, safety and integrity initiatives, fan engagement and corporate partner development. The NTRA owns and manages the NTRA Safety and Integrity Alliance; NTRA.com; the Eclipse Awards; the National Horseplayers Championship; NTRA Advantage, a corporate partner sales and sponsorship program; and Horse PAC®, a federal political action committee. NTRA press releases appear on NTRA.com, Twitter (@ntra) and Facebook (facebook.com/1NTRA).
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Three-Year Racehorse Depreciation Extension Passed by House of Representatives

LEXINGTON, Ky. (December 17, 2019) A key provision that extends three-year tax depreciation for all racehorses through 2020 today passed the House of Representatives by a vote of 297-120. The racehorse provision is part of a larger tax package agreed to by Republican and Democratic leaders and now expected to be taken up by the Senate in the next several days.

Uniform three-year racehorse depreciation was among numerous tax provisions across many industries that either expired at the beginning of 2018 or this year, or were set to expire as of Jan. 1, 2020. The bill reinstates the 3-year schedule for all racehorses retroactive to 2018.

The provision allows taxpayers to depreciate, on a three-year schedule, racehorses 24 months of age and younger when purchased and placed into service, as opposed to a seven-year schedule.

“Reinstatement of three-year depreciation for all racehorses helps attract and retain investment in the horse racing industry,” said NTRA President and Chief Executive Officer Alex Waldrop. “We appreciate the House’s work to include this important provision.”

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.

Maintaining the three-year recovery period for racehorse purchases has been a top legislative priority for the NTRA federal legislative team since the provision’s initial enactment as part of the 2008 Farm Bill.

The Senate has until Friday, December 20, to pass this legislation.

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Legislation Would Restore Three-Year Depreciation

Senate Finance Committee chairman Chuck Grassley, an Iowa Republican, and ranking member Ron Wyden, an Oregon Democrat, introduced bipartisan tax and disaster relief legislation Feb. 28 that includes three-year depreciation for racehorses.

Under the proposed package, three-year racehorse depreciation would be retroactive for 2018, continue through 2019 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 NTRA federal legislative team will pursue passage of three-year depreciation as part of this tax extenders legislation as we have done since its original inclusion in the 2008 Farm bill.

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THREE-YEAR RACEHORSE DEPRECIATION RETURNS RETROACTIVELY FOR FISCAL YEAR 2017

Friday, February 9, 2018 President Trump  signed into law the Bipartisan Budget Act, a bill that among other measures extends retroactively for fiscal year 2017 uniform three-year racehorse depreciation, an important tax provision supported by the National Thoroughbred Racing Association (NTRA) that expired in 2016 alongside certain other expired tax provisions.  The bill also funds the federal government until March 23.

Three-year depreciation is an investment incentive for racehorse owners that had been in place for several years before expiring at the end of 2016.

“We wish to thank Senate Majority Leader Mitch McConnell for his continued support for our industry,” said NTRA President and CEO Alex Waldrop. “We’ve worked with the Leader for over a decade on our industry’s unique issues, and we appreciate his continued efforts.”

Prior to the 2008 Farm Bill, which became effective January 1, 2009, racehorses 24 months of age and younger when purchased and placed in service, were depreciated on a seven-year schedule that did not accurately reflect the length of a typical racehorse’s career; only racehorses over 24 months old were depreciated using a three-year schedule.

The NTRA will continue to advocate for tax policies that accurately reflect our unique industry.

About the NTRA

The NTRA, based in Lexington, Ky., is a broad-based coalition of more than 100 horse racing interests and thousands of individual stakeholders consisting of horseplayers, racetrack operators, owners, breeders, trainers and affiliated horse racing associations, charged with increasing the popularity, welfare and integrity of Thoroughbred racing through consensus-based leadership, legislative advocacy, safety and integrity initiatives, fan engagement and corporate partner development. The NTRA owns and manages the NTRA Safety and Integrity Alliance, NTRA.com, the Eclipse Awards, the National Handicapping Championship, NTRA Advantage, a corporate partner sales and sponsorship program, and Horse PAC, a federal political action committee. NTRA press releases appear on NTRA.com, Twitter (@ntra) and Facebook (facebook.com/1NTRA).

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