Congress passes spending plan that includes HISA, depreciation extension

The United States House of Representatives and Senate the evening of Dec. 21 passed a $1.4 trillion spending package includes the Horseracing Integrity and Safety Act of 2020 and an extension of a racehorse tax depreciation schedule.

Early in the morning of Dec. 22, federal lawmakers also passed a $900 billion COVID-19 relief bill that includes provisions that could benefit the horse racing and breeding industry. The programs are similar to those that were established in the spring of 2020 to offer financial aid to individuals and businesses impacted by the virus.

The omnibus spending package covers the remainder of the current federal fiscal year. HISA, which would create an authority to oversee medication policies and drug testing in Thoroughbred racing as well as establish standards for health and safety, will take effect July 1, 2022. The legislation is available here.

The National Thoroughbred Racing Association reported that the spending package includes three-year tax depreciation for all racehorses through 2021. Uniform three-year racehorse depreciation was among numerous tax provisions across many industries that were set to expire at the end of 2020.

The provision extends the three-year depreciation schedule for all racehorses through 2021 and allows taxpayers to depreciate, on a three-year schedule, racehorses less than 24 months of age when purchased and placed into service. In the past, racehorses of that age were depreciated on a seven-year schedule.

The accelerated schedule better reflects the length of a typical racehorse's career and is more equitable for owners, said the NTRA, which noted that maintaining the three-year recovery period for racehorse purchases has been a top legislative priority since 2008.

Regarding COVID-19, the NTRA said eligible racetracks and farms can again participate in the second round of the Paycheck Protection Program. The new provisions include:

  • Expanded PPP loan terms that include new eligibility for horse and farm owners without employees operating as sole proprietors or via single member LLCs;
  • New PPP eligibility for qualifying 501(c)(6) organizations with less than 300 employees;
  • Additional eligible expenses that now also include software, human resources, accounting, and personal protective equipment for those who have not yet had PPP loans forgiven;
  • A second draw PPP loan of up to $2 million that now is available for qualifying businesses with at least a 25% reduction in gross receipts;
  • Extension of employer tax credits for paid sick and family leave and employee retention into 2021; and
  • Full deductibility of meals from restaurants during 2021 and 2022.

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