REMINDER: TAX BENEFITS FOR THE HORSE INDUSTRY

July 29, 2010 - Earlier this year, Congress passed the Hiring Incentives to Restore Employment Act, which included an extension of the equine expensing allowance through 2010. President Barack Obama signed the bill into law immediately.

Here are the highlights:

• Last year, Congress passed the Stimulus Bill that included bigger write-offs for horses and other property purchased and placed in service during 2009. But these provisions expired at the end of 2009. The new HIRE Act extended Section 179, which allows an owner to expense up to $250,000 of the cost for horses or other business property purchased and placed in service through 2010. Once total purchases of horses and other eligible property reach $800,000, the expense allowance goes down $1 for each dollar spent over $800,000. To illustrate the expensing allowance, assume a horse business purchases $750,000 of depreciable property in 2010, including $650,000 for horses.That business can write off $250,000 on its 2009 tax return and depreciate the balance. If instead, purchases were $900,000, the expense allowance would go down by $100,000. This provision would benefit any business involved in the horse industry that purchases and places depreciable property in service in 2010.
  
• The legislation also included provisions to forgive payroll taxes for hiring unemployed workers and gives a business tax credit of $1,000 for every new employee retained for 52 weeks to be taken on the employee's 2011 tax return.