Friday, October 28, 2005Contact: NTRA
U.S. Equine Equity Act of 2005

The Equine Equity Act has been introduced in the U.S. House of Representatives (H.R. 4151), and referred to the House Agriculture Committee and the Ways and Means committee. The bill is the companion measure to the Senate bill introduced in late July.

The bill would end the disparate treatment of the horse industry versus other businesses under the federal tax code and other federal provisions. Specifically, the legislation would:

  • Make horses eligible for capital gains treatment after twelve months, similar to other business assets

    Under the federal tax code, gains from sales by individuals of property used in a trade or business, including horses, qualify for long-term capital gains and are subject to the maximum capital gains tax rate of 15%. Unfortunately, horses held for breeding, racing, showing or draft purposes generally qualify for the 15% capital gains rate only if they are held for 24 months, rather than the 12 months required of other assets. Passage of this legislation would end this discriminatory treatment of horses under the tax code and allow horse owners to enjoy the reduced rate upon sale after holding the horse for 12 months.

  • Place all race horses in the three-year category for depreciation purposes

    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, which is usually at the end of its yearling year. Race horses over two when placed in service are depreciated over three years; if not over two, they are depreciated over seven years. (A horse is deemed to be “over two” for tax purposes twenty-four months and a day after it is foaled.)

    This legislation recognizes that most race horses do not race for seven years and would change the tax code to allow owners to depreciate all their race horses over three years.

    The change would provide for a more equitable depreciation schedule for race horses, one that better matches the realities of the situation.

  • Make horses eligible for federal emergency assistance under circumstances presently enjoyed by other livestock and crop producers.

    The legislation would also make horses eligible for federal emergency relief similar to other livestock and crops. Horses have been ineligible for federal emergency funds, although losses from natural disasters affect horse breeders just as they affect other livestock and crop producers.

    This legislation would end this unfair discrimination and provide that in emergencies horse breeders would be eligible for emergency assistance that producers of other crops and livestock have enjoyed. Broadening the current emergency assistance programs to include horses will rectify the unfair economic situation now facing horse owners and breeders versus other livestock producers in the aftermath of disasters.

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