Benefits
In The Economic Stimulus Act For The Horse Industry
by Colleen Scott
While most consumers are starting to receive their Economic Stimulus
Act checks, there are lesser known benefits to horse owners. As
outlined by the American Horse Council, a lobbying organization
based in Washington D.C., the Economic Stimulus Act, signed into law
by President Bush on February 13, also provides tax incentives that
would allow a much bigger write-off for horses and other depreciable
property purchased and placed into service during 2008. Says
American Horse Council President Jay Hickey, "This should provide an
additional incentive for people to invest in more horses for racing,
showing and breeding as part of their business activities."
According to a press release issued by the Council, 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 purchased 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." The incentive does not apply to property that has
a depreciation life of over 20 years.
 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 time to
which the property is put to use, 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.
As an example of 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 before 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. For more specifics about how this might impact your horse
business, contact your tax advisor.
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Squaw
Valley Fun Show Was Big Success
by Sandy Boswell
Rocky Ridge Ranch
The annual
California Paso Fino Horse Association Fun Show was held on May
17 & 18, 2008 at the Hidden Oaks Paso Fino Ranch in Squaw
Valley, California; hosted by owners Kathy and Perry Zarr.
The “original” Squaw Valley is in the Fresno County foothills,
20 miles from Sequoia National Park. The Zarr’s really surpassed
expectations in preparing for the event. A fantastic 150 x 190
arena was built with overlooking decks and a concession stand.
Portable stalls were erected to accommodate the visiting horses.
In past years,
Vickie McQuinn and Johnny Lanier of De Los Mejores in Clovis,
California hosted this event. Vickie and Johnny have purchased
365 acres in South Carolina and are commuting and working hard
building a 28-stall barn on their new ranch in anticipation of
moving in the near future.
 Riders attended
from California, Arizona and New Mexico and a great time was had
by all. Participants spent the night in their RV’s, horse
trailers and other nearby accommodations including the new
vacation guest rental on the Zarr ranch. Twenty-five horses
participated in twenty-two classes. There were numerous sponsors
and donated prizes. The only non-cooperating factor was an
unusually hot weekend with temperatures of 100 degrees! Instead
of having the games after lunch, they were held after dinner
that evening which added even more fun!
Hot dogs
(donated by Miller Meat Packing) and drinks were available
during the day and a great barbeque was served at 7 PM with beef
kabobs, chicken kabobs, salads, casseroles, breads and desserts.
Some of the
riders stayed the next day for a memorable poker ride through
the Zarr and Boswell ranches. The host, Perry Zarr, won 50% of
the pot.
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