Industry Info
The American Horse Council
to Roll Out Tax Handbook 2019!
The American Horse Council
(AHC) is pleased to offer the 2019
edition of the AHC Tax Handbook,
informing members of the horse
industry about major changes
brought about by landmark tax
reform legislation, the Tax Cuts and
Jobs Act (“TCJA”) of 2017. This
statute rewrites key provisions of
the U.S. Internal Revenue Code
(“Code”) impacting American busi-
nesses and individuals, including
members of the equine sector and
horse owners. Because of the scope
of the changes made to the code –
the most significant tax overhaul
since 1986 – AHC believes that the
new tax handbook – an electronic
volume available for distribution on
December 2, 2019 - will serve as an
important tool to help you navigate
the new law. To pre-order a copy
of the 45-page volume – on sale for
$95 plus shipping – go to https://
www.horsecouncil.org/resources/
horsecouncil-publications/
The AHC Tax Handbook out-
lines major business issues, such
as reduced corporate tax rates, the
new deduction for “pass-through”
entities tailor-made for small
business – which is the most com-
mon-place entity within the horse
industry - and modified “expens-
ing” provisions. It also addresses
individual tax issues, such as the
new individual income tax rates,
limitations on state and local tax
deductions, and changes to the
estate and gift tax.
Although the 2019 edition fo-
cuses on important changes to the
10 • Walking On
code, it also addresses threshold
legal questions that the new law
leaves relatively unchanged and di-
rectly impacts horse owners. These
include factors that distinguish
a “business” from a “hobby,” tax
treatment of sales and exchanges,
and recordkeeping requirements,
among others.
Get your copy of the new Tax
Handbook and learn more about
the following specific changes to
the tax code:
21% Corporate Tax Rate This
is a central feature for any horse
business filing, or contemplating
reclassification, to “C Corporation”
status.
20% Deduction for Pass-
Through Entities The new law
establishes a 20% deduction for
qualified business income that busi-
ness owners receive from certain
“pass-through” entities (e.g., part-
nerships, S Corporations, or sole
proprietorships).
Depreciation and Expensing Im-
portantly for the horse industry and
the broader agriculture sector, the
new tax law includes 100% bonus
depreciation through December 31,
2022, for property placed in service
after September 27, 2017.
Unrelated Business Income Tax
(“UBIT”), Fringe Benefits Unlike
previous editions of the Tax Hand-
book, the current volume addresses
certain changes in the law relating
to the potential UBIT liability of
nonprofit organizations and trade
associations.
While the new tax law may cause
some AHC members to reconsider
their current business classification,
many horse enthusiasts have likely
already noticed the impact of the
TCJA’s changes on their individual
filings, beginning with last year’s
tax returns.
Estate and Gift Tax. The new
tax law ultimately preserves the
estate tax, but doubles the exemp-
tion amount in the Code. The new
law retains the gift tax exclusion at
$15,000 annually.
State and Local Taxes (“SALT”)
Under the new tax law, the annual
deduction allowed for state and
local taxes is limited to $10,000
($5,000 if married filing separate-
ly). Many AHC members who
file returns in high-tax states have
undoubtedly already noticed the
elimination of this longstanding,
formerly unlimited deduction.
The Tax Handbook is designed to
provide accurate and authoritative
information regarding the subject
matter covered. It is provided
with the understanding that nei-
ther the American Horse Council
nor any editors or contributors to
the Tax Handbook are providing
tax or legal advice. The reader is
encouraged to consult independent
legal or tax counsel before making
any decisions or taking any action
concerning the matters in the Tax
Handbook. The Tax Handbook
cannot be used for the purpose of
avoiding any penalties that may be
imposed under federal, state, or
local tax law.