Congress Overrides Veto of Farm Bill, Provisions
Beneficial to Horses Become Law
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On Thursday May 22, Congress overrode Presidents Bush’s veto of the Food, Conservation, and
Energy Act of 2008, commonly known as the Farm Bill. The House passed the bill again on May
21, by a vote of 316 to 108. The Senate passed it a day later, May 22, by a vote of 82 to 13. Due
to a clerical error one title of the Farm Bill concerning trade remains in limbo. However, all other
titles of the bill including several provisions that benefit the horse industry are now law.

Depreciation of Race Horses Shortened
The tax portion of the bill will amend the current depreciation schedule for race horses to make it
uniform at three years. Effective January 1, 2009 all race horses will be depreciated over three
years, regardless of their age when placed in service. Prior to then race horses will continue to
be depreciated over seven years if they are placed in service before they turn two. This change
to the tax code for race horses will “sunset” after five years, ending at the end of 2013.

Last year Senators Mitch McConnell (R-KY), Jim Bunning (R-KY) and Blanche Lincoln (D-AR)
introduced the Equine Equity Act (EEA), which proposed to put all racehorses in the three-year
category for depreciation purposes and make horses eligible for capital gains tax treatment after
being held for twelve months.

“The EEA was included in the Senate version of the Farm Bill by an amendment offered by
Senator McConnell,” said Jay Hickey president of the American Horse council. “Although the
Equity Act was not in the House-passed Farm Bill, the depreciation provision was included in
the final bill through the efforts of Senator McConnell who understood the inequity and worked
overtime to ensure it was changed.”

With the passage of this provision, horse owners will no longer have to decide whether to place
their horse in service at the end of its yearling year, and depreciate it over seven years, or wait
until the horse reaches 24 months and a day in order to use the three-year depreciation schedule.
This period is often only a few months. “Beginning in 2009, all race horses will be depreciated
over three years regardless of when placed in service. This amendment will end the inequitable
situation of depreciating race horses over seven years, a period that is about twice as long as
their actual racing time,” said Hickey.

The second tax provision in the EEA, which would have shortened the capitol gains holding
period for horses from two years to one year, was not included in the final conference version
of the Farm Bill passed by Congress.

Equine Farmers and Ranchers Eligible
for Emergency Loans

Another provision in the bill makes horse breeders eligible for the first time for emergency
federal loans following a disaster. This change will include “equine farmers and ranchers” within
the group of producers eligible for these federal emergency loans. “Horse breeders have not been
eligible for these loans, which have been available to other livestock producers for some time,”
said Hickey. “Horse breeders suffer losses from hurricanes, drought, ice, floods and other
natural disasters just like other livestock producers do. This provision will end the disparate
treatment of horses and horse breeders by making them eligible for emergency loans under the
same conditions and limits as other livestock producers. Again, the horse industry owes thanks
to Senator McConnell for his efforts in passing this provision.”

Horses Specifically Included as Livestock
in Disaster Assistance Program

The Farm Bill also includes a new permanent disaster assistance program that will provide relief
funds to farmers and ranchers who suffer losses in areas that are declared disaster areas by USDA.
This program is intended to make funds available sooner following a disaster. Horses are
specifically included within the definition of livestock eligible for the program. “The inclusion of
horses was pursuant to an amendment offered by Senator Bunning to the Senate Farm Bill. The
provision was accepted by the Conference Committee,” said Hickey. “This is important to the
horse industry and we appreciate his efforts.”

The horse industry has been working for these last two changes for some time. The industry is
now treated like other livestock producers with respect to federal emergency programs.
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As the national association representing all segments of the horse industry in Washington, D.C.,
the American Horse Council works daily to represent equine interests and opportunities.
Organized in 1969, the AHC promotes and protects the industry by communicating with
Congress, federal agencies, the media and the industry on behalf of all horse related interests
each and every day.

The AHC is member supported by individuals and organizations representing virtually every
facet of the horse world from owners, breeders, veterinarians, farriers, breed registries and
horsemen's associations to horse shows, race tracks, rodeos, commercial suppliers and state
horse councils.