03/08/2013 1:01PM

Ky. Congressman introduces capital gains tax relief bill for horse owners

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Freshman Congressman Andy Barr of Kentucky introduced the Equine Tax Parity Act (HR-998) in the U.S. House of Representatives on Wednesday, which would reduce the capital gains holding period on horses from 24 months to 12 months.

The capital gains tax is a form of income tax on the profit from the sale of a non-inventory asset that was purchased at a cost lower than the amount of the final sale. It is commonly applied to stocks, bonds, precious metals, and property. After a certain holding period, usually one year, these assets are considered “long-term” capital gains and are taxed at a more favorable rate.

Horses vary from most other business assets under current federal tax law, in that they must be held for at least two years to become eligible for a lower capital gains tax rate instead of the single year that many other assets dictate.

“The legislation I have introduced would finally eliminate a 44-year-old tax provision that discourages investment in the equine industry, bringing much needed relief to an economic sector that supports 1.4 million full-time jobs,” said Barr, a Lexington Republican. “This bill will bring parity to the tax code for the Commonwealth’s signature industry, ultimately helping put Kentuckians back to work.”