The Protecting Americans from Tax Hikes (PATH) Act of 2015 maintains the three-year recovery period for racehorse purchases that has been a top legislative priority for the National Thoroughbred Racing Association (NTRA) since the provision’s initial enactment as part of the 2008 Farm Bill. Most recently, the NTRA successfully secured inclusion of three-year depreciation in the 2014 tax extenders package that expired at the end of 2014.

“The NTRA applauds the efforts of Congress in recognizing the important role of three-year depreciation for purchasers of young racehorses,” said NTRA President and CEO Alex Waldrop. “Owners and breeders can now invest with confidence knowing that this important tax incentive will be available for at least the next two years.”

The provision allows taxpayers to depreciate, on a three-year schedule, racehorses 24 months of age and younger when purchased and placed into service, as opposed to a seven-year schedule. The accelerated schedule better reflects the length of a typical racehorse’s career and is more equitable for owners.

The PATH Act also retroactively extends two other provisions that spur investment in racehorses and depreciable farm equipment.

“Bonus depreciation” will remain set at 50 percent and may be used by business owners who purchase and place in service qualified new depreciable property. Yearlings that an owner purchases and puts into a training program are one example of eligible property. Bonus depreciation is set at 50 percent for 2015, 2016 and 2017, at 40 percent for 2018 and at 30 percent for 2019.

The “Section 179 expense allowance” will be set at $500,000, with a $2-million threshold for qualified new or used property purchased and placed in service by small business owners in many industries. Total purchases of qualified property that exceed $2-million reduce the taxpayer’s expense allowance dollar for dollar. Broodmares may be eligible for expensing and are an example of used property because of their prior use as a racehorse or broodmare. The comprehensive budget and tax legislation will make the Section 179 expense allowance incentive permanent at this level.

Provisions backed by the NTRA that offer relief for H-2B visa employers such as horse trainers were also approved by Congress as part of the omnibus appropriations bill.

Of particular interest to trainers and others in the Thoroughbred industry who rely on H-2B workers are these beneficial provisions:

H-2B returning workers are exempt from the annual 66,000 H-2B cap;

Those paying H-2B wages are allowed the use of private wage surveys, which are not allowed under current H-2B rules;

Seasonal employment is clearly defined as 10 months of employment, as opposed to nine months in the current H-2B rules;

The Department of Labor (DOL) is prevented from implementing the provisions of current H-2B rules related to corresponding employment and the 3/4 guarantee requiring a set number of work hours; and

DOL is prohibited from implementing a burdensome new enforcement scheme related to auditing of employers and certifying officer (CO) assisted recruitment.

“We applaud Congress for recognizing the need for more H-2B visas, which will allow trainers and other major employers in the Thoroughbred industry to properly hire the workers they need,” said Waldrop. “Thoroughbred racing and breeding still need comprehensive immigration reform but these changes to the H-2B visa program are a step in the right direction.”

The H-2B visa program is used by many industries, including horse racing, to access temporary seasonal workers when domestic help is unavailable. Horse trainers typically use the program to hire grooms and other barn help. The lack of documented H-2B workers has significantly hindered the ability of horsemen to hire qualified backstretch employees.