According to the American Horse Council, the Small Business Jobs and Credit Act of 2010, signed into law by President Barack Obama on September 27, will benefit members of the horse industry. The bill is intended to help small businesses and create new jobs, and continues to offer significant write-offs for horses and other property purchased and utilized by horse businesses.
The first incentive allows an owner who purchases a horse or other property used for business purposes in 2010 or 2011 to expense up to $500,000 of the cost. This expensing allowance applies to horses, farm equipment and most other depreciable property. Once total purchases of horses and other eligible property reach $2 million, the expense allowance goes down one dollar for each dollar spent over $2 million. Without the bill, the expensing allowance would be $250,000 in 2010 and decline to $25,000 in later years.
The second incentive reinstitutes the 50% first-year bonus depreciation for horses and most other depreciable property purchased and placed in service during 2010. Similar to the bonus depreciation that expired in 2009, this benefit applies to any property that has a depreciable life of 20 years or less. The property must be new, meaning that the original use of the horse or other property must commence with the taxpayer. For a horse to be eligible, it cannot have been used for any purpose before it was purchased.