In the beginning of this year, Presidents Obama signed a Stimulus Bill to stimulate the U.S. economy. The Stimulus Bill provides for a bigger write-off for horses and property purchased and placed in service during 2009. Here are a few provisions in the Stimulus Bill.

First Incentive- Expensing Allowance

This allows an owner who has purchased a horse or other business property that is placed in service in 2009 to expense up to $250,000 of the cost. This “Section 179” deduction applies to horses, farm equipment and most other depreciable business property. Once the total of the purchases has reached $800,000 for every dollar over $800,000 the expense allowance there will be a dollar for dollar reduction.

Second Incentive- Bonus Depreciation

This incentive will continue the 50% first- year bonus depreciation of the horses and depreciable property that was purchased and placed in service during 2009. If a property has a depreciable life of 20 years or less, it applies.  The property must be new, which means that the original use must start with the taxpayer. For a horse to qualify, it couldn’t have been used for any purpose before the purchase.

Other Provisions

State and Local Taxes: The Stimulus Bill offers all taxpayers a deduction for state and local sales and excises taxes that were paid on a purchase of a new car, light trucks and recreational vehicles through 2009. This deduction does not apply to taxpayers with an adjusted gross income of more than $125,000 (for single filers) and $250,000 for taxpayers filing a joint return.

NOL Carryback: Currently the law allows net operating losses (NOLs) to be carried back two years before the operating loss occurred and carried forward up to twenty years after the loss. The 2008 bill extended the maximum NOL Carryback to five years for a small business that have a gross revenue of $15 million or less.

Note this is not tax or legal advice. Please contact your CPA or tax lawyer for more details.

Info courtesy of the American Horse Council.