Horse owners ability to utilize a Section 179 deduction against income from multiple active trades or businesses

January 2018 By Joel B. Turner and Nelson D. Rodes IV
American Horse Council Tax Bulletin

While the Internal Revenue Code ("the Code") allows taxpayers to deduct from taxable income all ordinary and necessary expenses incurred in carrying out an active trace or business, generally, when purchasing tangible business assets with a useful life greater than a taxable year, the asset must be capitalized rather than deducted from business income for the year the property is placed in service. Under the Code, taxpayers are generally allowed to take an annual depreciation deduction for the wear, tear, and deterioration of their capitalized tangible property used in an active trade or business over an applicable recovery period.

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