Both the U.S. House of Representatives and U.S. Senate on Monday passed legislation that contains key tax reform and COVID-19 relief provisions beneficial to the horse breeding and racing industry.
A $1.4 trillion omnibus package that includes funding for the federal government's current fiscal year included the Horseracing Integrity and Safety Act (HISA), historic legislation that will establish national standards to promote fairness, increase safety in Thoroughbred racing.
“We thank Senate Majority Leader Mitch McConnell for his pivotal role in the passage of the Horseracing Integrity and Safety Act (HISA) by the U.S. Senate,” said Alex Waldrop, President and Chief Executive Officer of the National Thoroughbred Racing Association (NTRA). “We also applaud Senators Kirsten Gillibrand (D-NY) and Dianne Feinstein (D-CA) and Congressmen Andy Barr (R-KY) and Paul Tonko (D-NY) and other allies in Congress whose support helped make this watershed moment possible. We look forward to President Trump signing the HISA into law and by doing so, commencing the establishment of an independent and well-informed central authority that will ensure the integrity of our sport and the safety of our human and equine athletes nationwide.”
A key provision that extends three-year tax depreciation for all racehorses through 2021 also was part of the omnibus package. Uniform three-year racehorse depreciation was among numerous tax provisions across many industries that were set to expire at the end of 2020. The provision extends the three-year depreciation schedule for all racehorses through 2021 and allows taxpayers to depreciate, on a three-year schedule, racehorses less than 24 months of age when purchased and placed into service. In the past, racehorses of this age were depreciated on a seven-year schedule. The accelerated schedule better reflects the length of a typical racehorse's career and is more equitable for owners. 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.
A $900 billion COVID-19 relief package included several positive provisions relative to horse breeding and racing. Eligible racetracks and farms would again be allowed to participate in this second round of the Paycheck Protection Program (PPP) as they were in the first round after the NTRA helped secure favorable guidance from the Small Business Administration (SBA). The new provisions include:
- Expanded PPP loan terms that include new eligibility for horse and farm owners without employees operating as sole proprietors or via single member LLCs
- New PPP eligibility for qualifying 501(c)(6) organizations with less than 300 employees;
- Additional eligible expenses that now also include software, human resources, accounting, and personal protective equipment for those who have not yet had PPP loans forgiven;
- A second draw PPP loan of up to $2 million that now is available for qualifying businesses with at least a 25% reduction in gross receipts;
- Extension of employer tax credits for paid sick and family leave and employee retention into 2021; and
- Full deductibility of meals from restaurants during 2021 and 2022.
“The relief package has some helpful provisions for industry participants, especially with regards to the enhanced PPP loan program, and the three-year tax depreciation for yearlings,” said Jen Shah, Tax Director at Lexington, Ky.,-based Dean Dorton. “This new relief plus the current 100% bonus depreciation available on qualifying purchases continue to provide meaningful tax deductions for horse and farm owners.”
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