New tax bill benefits the US horse racing industry
The bill that is waiting for Trump’s signature would benefit the horse racing industry as it reduces multiple taxes.
US.- As the National Thoroughbred Racing Association (NTRA) assessed, the Tax Bill that was cleared by the Congress for the signature of President of the United States, Donald Trump, contains a number of provisions that would benefit horse breeders and owners.
The tax bill benefits the horse racing industry by slashing corporate tax rates, reducing most individual tax rates, doubling the estate tax exemption from US$5 million to US$10 million (indexed for inflation occurring after 2011), and generally providing special tax treatment for certain pass-through entities (sole proprietorships, partnerships, limited liability companies, and S corporations). The package also includes significant and positive changes to depreciation and expensing of yearlings, breeding stock, farm equipment and other qualifying depreciable property.
The Bonus Depreciation is an increase from 50 to 100 percent for both new and used property acquired and put into service after September 27, 2017, and before January 1, 2023. Bonus depreciation permits first-year, full expensing for purchases such as yearlings, breeding stock, and farm equipment. Current law provides for 50 percent depreciation on new property only. The new benefits will be effective at the 100 percent rate through 2022. Beginning with 2023, bonus depreciation will be phased out at a rate of 20 percent each year until fully phased out after 2027.
NTRA President & CEO Alex Waldrop said: “At more than 700 pages, the tax bill and accompanying joint explanatory statement are enormous in both size and complexity. Whilst the overall impacts on each individual will vary, in general many of the provisions should have a positive impact on the economics of horse racing and breeding.”
The NTRA also successfully worked towards the defeat of a proposed amendment that would have eliminated the itemised miscellaneous deduction for gambling losses entirely. Therefore, horseplayers will continue to be allowed to deduct their losses from wagering transactions up to the amount of winnings.
Nevertheless, from January 1 through December 31, 2025, the limitation on losses from wagering transactions will apply not only to the actual costs of wagers incurred by an individual, but also to other deductible expenses such as travel and lodging incurred by the individual in connection with the conduct of that individual’s gambling activity.
“The information presented in this release is not a comprehensive explanation of the tax bill. The NTRA urges every industry participant with tax concerns to consult with your tax advisor for information and planning advice applicable to your specific situation,” added Waldrop.
