Tax law can and does change, but two investment incentives are in place for 2017 that can benefit those who choose to invest in thoroughbred racing partnerships. These incentives may be used together.
50% Bonus Depreciation
The 50% bonus depreciation applies to new property purchases, including yearlings, when original use of the property begins with the taxpayer. The full 50% bonus depreciation write-off is allowed regardless of when in 2017 the property is purchased, as long as it is placed in service before January 1, 2018. The 50% bonus depreciation changes to 40% in 2018 and 30% the following year.
$500,000 Expense Allowance
Now permanently in effect, this allows for the write off of up to $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 $2 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.