The introduction of a new tax bill by President Donald Trump has been a hot topic throughout the country, and for good reason, but when it comes to it will be a positive for the sport according to the National Thoroughbred Racing Association (NTRA). Since all stables are set up as corporations, they will receive major benefits in terms estate tax exemption, individual tax rates for major earners, while also providing obvious advantages for pass-through relationships such as partnerships.
“At more than 700 pages, the tax bill and accompanying joint explanatory statement are enormous in both size and complexity,” noted NTRA President and 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.”
Horseplayers who gamble on racing frequently will also be able to deduct wagering losses under the new tax bill up to the amount that they have won, which is nothing new. However, horseplayers will also be able to deduct travel costs associated with gambling. That further incentives people to attend major evens like the Triple Crown and the Breeders’ Cup in 2018 and beyond because a major portion of those expenses can be written off.
Transactions in horse racing at the highest levels are generally of a high dollar amount so owners and breeders will gain some serious savings when purchasing yearlings, for example. The bonus depreciation of these transactions has been doubled from 50% to 100%, meaning that yearlings, farm equipment and other expenses can be written off at a full rate. Farm property, equipment and machinery will also receive an increased deduction of 200% up to $1 million. This includes new and used items such as horses and stable utilities so in general it will be vastly cheaper in terms of operating these facilities.
“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.” The new tax bill has gone in to effect already and will scale back to September 2017 forward through 2025. It’s a big win for a sport that has generally struggled financially.