Courtesy of the American Horse Council (www.horsecouncil.org)
Congress has passed a second jobs bill, the Hiring Incentives to Restore Employment Act (HIRE Act), which includes an extension of the expensing allowance through 2010 and other provisions to stimulate employment. President Obama sign the bill into law on Thursday, March 19, 2010.
Last year Congress passed the Stimulus Bill that included bigger write-offs for horses and other property purchased and placed in service during 2009. But these provisions expired at the end of 2009. The new HIRE Act extends one of the benefits, the so-called Section 179 expense deduction for assets, including horses, purchased and placed in service through 2010. The bill does not extend bonus depreciation, which expired at the end of 2009.
The HIRE Act also includes a few other provisions that may impact horse owners.
The Section 179 expense deduction allows an owner who purchases a horse or other business property and places it in service in 2010 to expense up to $250,000 of the cost. This applies to horses, farm equipment and any depreciable property used in a business. Once total purchases of horses and other eligible property reach $800,000, the expense allowance goes down one dollar for each dollar spent over $800,000.
To illustrate the expensing allowance, assume a horse business purchases $750,000 of depreciable property in 2010, including $650,000 for horses. That business can write off $250,000 on its 2009 tax return and depreciate the balance. If instead, purchases were $900,000, the expense allowance would go down by $100,000.
This provision would benefit any business involved in the horse industry that purchases and places depreciable property in service in 2010.
The new legislation also includes provisions to forgive payroll taxes for hiring unemployed workers and gives a business tax credit of $1,000 for every new employee retained for 52 weeks to be taken on the employer’s 2011 tax return. These provisions are designed to boost employment.
Editor's Note: If you know someone who might be interested in getting into the racing industry, this law makes 2010 an excellent time to do so - especially if they are needing a sizable tax write-off that the depreciation on racehorses could create. Be sure to share this information with them.