I need help with depreciation in our harness racing business

[sgras11]

I have 4 horses to depreciate a newly constructed barn and horse trailer

[NancyG]

Broodmares, stallions, horses older than 12 years of age, and racehorses depreciate over three years; broodmares, stallions, show horses, riding horses, or any other horse 12 years or younger depreciate over seven years. Depreciation begins when the horse is ‘placed in service, and that doesn’t always mean the year in which the horse is purchased. A Thoroughbred yearling bought for racing might be considered “placed in service” when training starts in the fall of the yearling year or when the horse begins racing as a 2-year-old. The same yearling bought as a show hunter prospect might not be “placed in service” for tax purposes until much later.

The IRS allows you to depreciate the basis of that trailer over a five-year period. The two different methods for calculating this depreciation are the 150 percent declining balance method and the straight line method. 

In general, any farm building can be depreciated over 20 years. If you buy a farm that has a barn, machine shop, etc., those buildings will be 20-year property, which qualifies for bonus depreciation as long as it is new property.