Tax
The 118th Congress has several tax-related measures under consideration that would bring clarity, stability, and fairness to those engaged in the equine industry. Below are several bills that the American Horse Council supports:
Equine Specific Taxes
The Race Horse Recovery Act of 2023 and The Racehorse Tax Parity Act. The Race Horse Recovery Act amends the IRS code to modify the accelerated depreciation allowance for race horses to allow a three-year recovery period for any race horse. (Current law limits the three-year recovery period to race horses placed in service before January 1, 2022, and race horses placed in service after December 31, 2021, that are more than two years old at the time they are placed in service.) The Racehorse Tax Parity Act would reduce the holding period for equine assets to be considered long term capital gains, putting them on a level playing field with other similar assets.
These bills were introduced by Representative Andy Barr (R-KY-6) and co-sponsored by Morgan McGarvey (D-KY-3).
Estate Tax
The “death tax” places a unique burden on the families of small business owners, farmers, and ranchers who inherit assets from deceased relatives. Because these enterprises operate with mostly illiquid assets, families are forced to sell land, livestock, assets (which have already been taxed) to pay the federal tax bill.
The Death Tax Repeal Act of 2023, introduced by Senator Thune (R-SD) eliminates the estate and generation-skipping transfer taxes. Under present law, the estate of a decedent who, at death, owns assets more than the estate tax exemption amount—or $12.92 million in 2023—must file a federal estate tax return.
Permanently Repeal the Estate Tax Act of 2023, H.R. 338 would repeal the federal estate tax, effective for estates of decedents dying after December 31, 2022. This bill was introduced by Representative Robert Latta (R-OH-5).
Other measures
- Res 237 is a measure “Recognizing the importance of stepped-up basis under section 1014 of the Internal Revenue Code of 1986 in preserving family-owned farms and small businesses.” This resolution supports the preservation of the stepped-up basis tax rule that allows recipients of inherited assets such as land, equipment, or buildings to adjust the cost basis of the assets to reflect their fair market value. The resolution opposes any efforts to impose new taxes on family farms or small businesses and recognizes the importance of generational transfers of farm and family-owned businesses. This resolution was introduced by Representative Tracey Mann (R-KS-
Legislation introduced by Representatives Kat Cammack (FL-R-03) and Jimmy Panetta (CA-D-19) would help farmers and ranchers coping with natural disasters. The Fair Access to Agriculture Disaster Programs Act, H.R. 4127 would waive the current adjusted gross income (AGI) limitations that block access to agricultural disaster assistance.
Next up on the agenda for tax and spending is House legislation to address the looming expiration dates of many of the Trump Administration’s tax breaks. The House is already moving on a package of tax measures that would restore lapsed tax breaks for businesses and expand the standard deductions.
Representative Jason Smith (R-MO-8), Chair of the Ways and Means Committee introduced a package of three bills under the title of the American Families and Jobs Act. The three measures: Tax Cuts for Working Families Act (H.R. 3936), the Small Business Jobs Act (H.R. 3937), and the Build It in America Act (H.R. 3938). Smith said the impetus for these measures came as a result of field hearings conducted by the Committee.
Elements of the bill include extension of full business expenses for equipment and machinery, repeal of the 1099-K form reporting threshold of $600 along with other changes to the Form 1099 requirements, repeal of certain green energy tax subsidies, increased standard deductions, creation of Rural Opportunity Zones in low-income rural areas, and imposition of an excise tax on the purchase of farmland by citizens of “countries of concern.”
Although the American Families and Jobs Act passed out of the Ways and Means Committee it is not expected to be adopted in the Senate. Rather, pieces of it will likely be included in an anticipated bi-partisan tax package to be considered later in the year.