The Tax Bill cleared by Congress for President Trump’s signature contains a number of provisions beneficial to horse breeders and owners, according to an initial assessment by the National Thoroughbred Racing Association (NTRA).
The tax reform package benefits the horse racing industry by slashing corporate tax rates, reducing most individual tax rates, doubling the estate tax exemption from $5 million to $10 million (indexed for inflation occurring after 2011), and generally providing special tax treatment for certain pass-through entities (sole proprietorships, partnerships, limited liability companies, and S corporations).
The package also includes significant and positive changes to depreciation and expensing of yearlings, breeding stock, farm equipment and other qualifying depreciable property. These include:
“At more than 700 pages, the tax reform bill and accompanying joint explanatory statement are enormous in both size and complexity,” said NTRA President & CEO Alex Waldrop. “While the overall impacts on each individual will vary, in general many of the provisions should have a positive impact on the economics of horse racing and breeding.”
For horseplayers – many of whom may benefit from the reduced corporate, individual, and pass-through entity tax rates – the NTRA successfully worked to defeat a proposed amendment that would have eliminated the itemized miscellaneous deduction for gambling losses entirely. Consequently, horseplayers will continue to be allowed to deduct their losses from wagering transactions (i.e., losing tickets) up to the amount of winnings. However, beginning January 1, 2018, through December 31, 2025, the limitation on losses from wagering transactions (up to the amount of winnings) will apply not only to the actual costs of wagers incurred by an individual, but also to other deductible expenses such as travel and lodging incurred by the individual in connection with the conduct of that individual’s gambling activity.
Waldrop added: “The information presented in this release is not a comprehensive explanation of the tax bill. The NTRA urges every industry participant with tax concerns to consult with your tax advisor for information and planning advice applicable to your specific situation.”
About the NTRA The NTRA, based in Lexington, Ky., is a broad-based coalition of more than 100 horse racing interests and thousands of individual stakeholders consisting of horseplayers, racetrack operators, owners, breeders, trainers and affiliated horse racing associations, charged with increasing the popularity, welfare and integrity of Thoroughbred racing through consensus-based leadership, legislative advocacy, safety and integrity initiatives, fan engagement and corporate partner development. The NTRA owns and manages the NTRA Safety & Integrity Alliance; NTRA.com; the Eclipse Awards; the National Handicapping Championship; NTRA Advantage, a corporate partner sales and sponsorship program; and Horse PAC®, a federal political action committee. NTRA press releases appear on NTRA.com, Twitter (@ntra) and Facebook (facebook.com/1NTRA).