Congress in December passed the Tax Increase Prevention Act of 2014 (H.R. 5771) which extends for 2014 tax provisions that benefit the horse industry. Many of the impacted provisions originally expired or were reduced at the close of 2013 (such as three-year depreciation for racehorses purchased or started in 2014). Under the new bill, these provisions are live until December 31, 2014 and expired on January 1.
The following provisions were extended:
179 Expense Deduction, which under the new legislation allows for an expense deduction at $500,000, with a phase-out at $2 million, for all business assets (including horses) purchased and placed in service in 2014.
Bonus Depreciation, allowing for the depreciation of 50% for the cost of new assets purchased and placed in service during 2014.
The Depreciation of Racehorses, which extends the three-year recovery period for all racehorses placed in service during 2014 (irrespective of age).
Conservation Easements, under which contributions of property for easements are allowed a deduction of up to 100 percent of the donor’s contribution base.