Hello....my husband and I purchased a broodmare who is currently in foal for a horse breeding business we started in 2016. Is her cost tax deductible?

[imingenius]

I am listing the tractor and horse trailer on Schedule C....does her cost also go on Schedule C?  As well as her AQHA registration fee and DNA testing? Also...I was prompted to list each as a separate business at the beginning of the prompt...doing my husband first and then going back and putting in my information.  Who do I list the assets under?  Split evenly?  Thanks so much!

[RichardK]

You should consider reporting your horse breeding business on Schedule F (farming business), click here for 2016 IRS publication 225 Farmer's Tax Guide (which provides valuable information on the taxation of horse breeding), also if both you and your husband own the business, you can treat it as a qualified joint venture and prepare two Schedule F's, each claiming 50% of income, expenses, and depreciation.

For a horse breeding business the horses can be assets that are depreciated (see page 42 in IRS publication for specific lives and depreciation methods). The tractor and trailer would also be assets that may be depreciated, or in some cases expensed. Registration fees and testing are generally expensed.