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Revised: 05/30/2008 |
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Congress Passes Farm Bill - Includes Provisions Beneficial to Horses After months of negotiations between the House and Senate, Congress finally passed the Food, Conservation, and Energy Act of 2008, commonly known as the Farm Bill. The House passed the bill on May 14 by a vote of 318 to 106. The Senate passed it today by a vote of 81 to 15. President Bush has announced that he will veto the bill because of the overall cost, which approaches $300 billion. If he does, Congress can override the veto by a two-thirds vote of both chambers. Based on the votes for the bill, it appears likely that Congress will override a Bush veto for the second time in his presidency. The Food, Conservation, and Energy Act of 2008 includes several provisions that benefit the horse industry. 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 twelve months. The EEA was included in the Senate version of the Farm Bill by an amendment offered by Senator McConnell. Although the EEA was not in the House-passed Farm Bill, the depreciation provision was included in the final Farm Bill through the efforts of these Senators, particularly Senator McConnell who shepherded this provision through the conference between the Senate and House on the overall Farm Bill. With the passage of this provision, horse owners will no longer have to decide whether to place their race 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. Beginning in 2009, all race horses will be uniformly depreciated over three years regardless of when placed in service. This means that an owner will be able to depreciate the horse twice as fast. This amendment will also end the inequitable situation of depreciating race horses over seven years, a period that is about twice as long as their actual racing life.
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 includes "equine farmers and ranchers" within the group of producers specifically eligible for these federal emergency loans.
Horse breeders have not been eligible for these loans, which have been available to other livestock producers. 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 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 to producers sooner following a disaster. Horses are specifically included within the definition of livestock eligible for the program. The inclusion of horses was pursuant to an amendment offered by Senator Bunning to the Senate Farm Bill and was kept by the conference committee.
The horse industry has been working for these last two changes for some time. The industry is now treated like other livestock producers with respect to federal emergency programs.
Please call with any questions. |
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