Tax law can and does change, but two investment incentives are in place that can benefit those who choose to invest in Thoroughbred racing partnerships. These incentives may be used together.
100% Bonus Depreciation
The 100% bonus depreciation applies to new property purchases, including yearlings, when original use of the property begins with the taxpayer. The full 100% bonus depreciation write-off is applicable to purchases made starting on January 20, 2025 when they are placed in service. Yearlings are typically considered in service by the fall or when they start training. An informational flyer is available here.
$1,500,000 Expense Allowance (Section 179)
Now permanently in effect, this allows for the write off of up to $1,500,000 in new or used property. In order to qualify, the property must be both purchased and placed in to service. The expense allowance can only be used against taxable income from the horse business or any other business from which the taxpayer has income, including salaries. It is reduced dollar for dollar once qualified investments exceed $3.13 million.
This information is based on data from the National Thoroughbred Racing Association. More information can be found at via the NTRA, IRS, or from your tax advisor.
