Bill would provide owners tax relief

LEXINGTON, Ky. - Sen. Mitch McConnell of Kentucky has introduced a bill designed to encourage investment in the horse industry and give horse owners access to programs that other livestock owners already can use.

The legislation would reduce the capital gains holding period for horses from 24 months to 12 months, reduce the depreciation period from seven years to three years, and make horses eligible for the U.S. Department of Agriculture's livestock disaster-assistance programs.

McConnell said the bill is co-sponsored by Sen. Jim Bunning of Kentucky and Sen. Blanche Lincoln of Arkansas.

"There is no good reason why horses and their owners should not be eligible for the same disaster assistance as other livestock," McConnell said in announcing the introduction of the bill, which he calls the Equine Equity Act. "My legislation will remove the unfair tax burden on horses that discourage investment in the horse industry."

Under current tax law, an owner must have a horse for two years before the horse is eligible to receive capital gains treatment. Currently, financial gains from the sale of property used in business receive the long-term capital gains tax rate of 15 percent, generally lower than an individual's personal tax rate. Other assets that are eligible for capital-gains treatment require only a 12-month holding period, while horses and cattle must be held longer.

The 24-month equine requirement was established in 1969, according to the American Horse Council, to discourage tax shelters. The horse council maintains that current tax law has incorporated a variety of changes to discourage tax shelters, making the 24-month equine provision useless under its original reasoning and unfair for horse owners.

Also under current tax law, horses who enter training when they are older than 2 are depreciated over three years, whereas those entering training before 2 years of age are depreciated over seven years. Racehorses' careers begin at age 2 and rarely last seven years, and McConnell believes that reducing the depreciation period will "more accurately reflect the racing life of horses," according to a release issued by his office.

"The horse industry is vital to Kentucky's economy and to the thousands of Kentuckians who participate in horse-related activities," McConnell said. "Our signature industry employs more than 50,000 Kentuckians and provides an annual economic impact of $3.5 billion to our commonwealth."

Race debut near for $1.85 million colt

Fairbanks, the Giant's Causeway colt who topped last year's Fasig-Tipton Saratoga sale at $1.85 million, will likely make his debut at the Spa on Aug. 20. Fairbanks breezed five-eighths in 1:00.89 at Saratoga on July 26 in the company of Pollard's Vision.

Barry Irwin, who bought the colt last year on behalf of Team Valor, said he has no regrets about the seven-figure outlay for the colt.

"His works have always been good," Irwin said. "Every time he does anything, he exceeds himself. He's ready to run right now, but we're afraid to sprint him because he's big. We want to win first time out.

"The thing about it is, he's great-looking, he moves good, and he has desire, which is why he's overachieving. He inspires confidence."

Team Valor also got pedigree when they bought Fairbanks. His sire, Giant's Causeway, is one of the hottest sires going at the moment, and his dam, the Time for a Change mare Alaska Queen, also is the dam of Grade 2 winner Keats and Grade 3-placed Grand Score.

"I was probably the first guy that called up to book a mare to Giant's Causeway that summer he won all those Group 1's," Irwin said, referring to the summer of 2000. From April to November of that year, his 3-year-old season, Giant's Causeway won six stakes, including five Group 1 events. He lost the Breeders' Cup Classic, his final race, by a neck to the eventual Horse of the Year, Tiznow.

"Horses like that don't just grow on trees, and it would have been unusual if he didn't make it as a sire."

The Team Valor partnership that owns Fairbanks has 24 partners, mostly breeders or racehorse owners, Irwin said.

"We had eight or 10 people call me out of the blue to buy this horse," he said. "Some of them had seen him at the sale and loved him."