Personal items eligible for LKE with Accruit.
Farms are finding it increasingly difficult to gain relief from the tax burdens impacting their ability to run a profitable operation. Depending on the size and scope of your farm, racehorses and other assets (like broodmares or stallions held for breeding, stallion shares, farm equipment, tractor trailers, aircraft, pasture land and other large expense items) provide an opportunity to defer thousands, hundreds of thousands, even millions of dollars in tax debt.
Improved cash flow for farms and livestock operations.
Accruit has acted as the QI for a number of the most prestigious farms in the U.S., assisting them in deferring millions of dollars in tax liability through our patented process and personalized service. A single Accruit professional is intimately familiar with your operations and is responsible for making sure that your LKEs are effectively and efficiently managed from inception through completion.
Tax depreciation for racehorses.
The depreciation of livestock continues to evolve within the tax code, suggesting regular monitoring by your tax advisor. The most current opportunity for the depreciation of racehorses is addressed in the Equine Equity Act, which is part of the 2007 Farm Bill. Specifically, racehorses now can be fully depreciated over three years. This accelerated depreciation schedule will significantly impact the gain realized upon the sale of these horses, generating an even greater value for farms that incorporate Like-Kind Exchanges into their overall tax strategy.
Many farms have taken advantage of bonus depreciation as allowed in multiple economic stimulus packages. The Bonus Depreciation component of the 2008 Act, for instance, allowed for an additional first-year depreciation deduction equal to 50% of the cost of the horse (or other depreciable property) that was placed in service in 2008. This created a significant benefit for 2008.
Once these assets are sold, however, the result is a dramatically increased gain and a recapture of those taxes. A Like-Kind Exchange will defer the total tax burden, potentially indefinitely, including this increased gain.