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By Robert R. Hill
The purchase of tangible-personal property (e.g., equipment, horses, fences and autos) for use in a for-profit horse operation generally is treated as a capital expenditure, and the cost generally is deductible over five to seven years under the applicable depreciation rules.However, there is a special election available that may allow the horseperson to treat all or a portion of the purchase of a piece of equipment, an auto or truck, a nonresale horse or the erection of a fence as a current expense (first-year expensing).The maximum deduction, which may be taken under this annual election, is as follows :.
With the increased amounts, this expensing election is becoming a valuable tax- planning consideration, and a brief summary of the relevant rules should assist in realizing its advantages.
, a partner with Crowe, Chizek and Company LLP, is chairman of the AICPA's Tax, Managerial and Governmental Accounting Reporting Subcommittee as well as the AICPA Board of Examiners.He
is experienced in equine taxation and is on the Tax Bulletin Advisory Board of the American Horse Council.Mr. Hill
has developed a reputation as a knowledgeable speaker and author on tax and equine topics.He
can be reached at firstname.lastname@example.org.
For Taxable yearsMaximum Deduction