Congress Overrides Veto of Farm Bill, Provisions Beneficial to Horses Become Law
RELEASE: May 29, 2008
AUTHOR/ADMINISTRATOR: Brian Sosby
On Thursday, May 22, Congress overrode Presidents Bush’s veto of the Food, Conservation and Energy Act of 2008, commonly known as the Farm Bill. The House passed the bill again on May 21, by a vote of 316 to 108. The Senate passed it a day later, May 22, by a vote of 82 to 13. Due to a clerical error, one title of the Farm Bill concerning trade remains in limbo. However, all other titles of the bill including several provisions that benefit the horse industry are now law. Depreciation of Race Horses Shortened
The tax portion of the bill will amend the current depreciation schedule for race horses to make it uniform at three years. Effective January 1, 2009, all race horses will be depreciated over three years, regardless of their age when placed in service. Prior to then, race horses will continue to be depreciated over seven years if they are placed in service before they turn two. This change to the tax code for race horses will “sunset” after five years, ending at the end of 2013.
Last year Senators Mitch McConnell (R-KY), Jim Bunning (R-KY) and Blanche Lincoln (D-AR) introduced the Equine Equity Act (EEA), which proposed to put all racehorses in the three-year category for depreciation purposes and make horses eligible for capital gains tax treatment after being held for 12 months.
“The EEA was included in the Senate version of the Farm Bill by an amendment offered by Senator McConnell,” said Jay Hickey president of the American Horse Council. “Although the Equity Act was not in the House-passed Farm Bill, the depreciation provision was included in the final bill through the efforts of Senator McConnell who understood the inequity and worked overtime to ensure it was changed.”
With the passage of this provision, horse owners will no longer have to decide whether to place their horse in service at the end of its yearling year, and depreciate it over seven years, or wait until the horse reaches 24 months and a day in order to use the three-year depreciation schedule. This period is often only a few months. “Beginning in 2009, all race horses will be depreciated over three years regardless of when placed in service. This amendment will end the inequitable situation of depreciating race horses over seven years, a period that is about twice as long as their actual racing time,” said Hickey.
The second tax provision in the EEA, which would have shortened the capitol gains holding period for horses from two years to one year, was not included in the final conference version of the Farm Bill passed by Congress.Equine Farmers and Ranchers Eligible for Emergency Loans
Another provision in the bill makes horse breeders eligible for the first time for emergency federal loans following a disaster. This change will include “equine farmers and ranchers” within the group of producers eligible for these federal emergency loans. “Horse breeders have not been eligible for these loans, which have been available to other livestock producers for some time,” said Hickey. “Horse breeders suffer losses from hurricanes, drought, ice, floods and other natural disasters just like other livestock producers do. This provision will end the disparate treatment of horses and horse breeders by making them eligible for emergency loans under the same conditions and limits as other livestock producers. Again, the horse industry owes thanks to Senator McConnell for his efforts in passing this provision.”Horses Specifically Included as Livestock in Disaster Assistance Program
The Farm Bill also includes a new permanent disaster assistance program that will provide relief funds to farmers and ranchers who suffer losses in areas that are declared disaster areas by USDA. This program is intended to make funds available sooner following a disaster. Horses are specifically included within the definition of livestock eligible for the program. “The inclusion o