You are here: Horses > Horse farms / ranches > The gain drain

The gain drain

By Rebecca Colnar, Article donated by the mane points horse resource center.

With April 15 only a few months away, it's time to sit down with the calculator and all of the bills, and a smile from recollecting the money made from selling Dobbin. But don't smile too much; the IRS may want its share of the booty.

"Was that horse sale part of your business?" Jay Hickey suggests you ask yourself. "If a horse is bought exclusively for resale as part of a business, then it's part of the horse operation's income. But if buying that horse is not part of your business--say the sale of your horse as just an isolated individual case--then you need to pay capital gains taxes," the president of the American Horse Council says.

Capital gain is the money made on the sale, less the amount you paid for the beast. For instance, if you bought Dobbin for $2,000 a few years ago, but sold him for $5,000,

thanks to your outstanding training skills, technically you owe taxes on the $3,000 profit you realized on the deal. "There is nothing you can buy or resell that you don't pay taxes on," Hickey says. "One point, however, is you don't pay capital gains if you owned the horse for less than six months."

Capital gains tax rates can change, and there's restructuring afoot for the entire tax code. But for now, the federal rates for 2001 taxes are 10 percent or 20 percent, depending on your tax bracket.

Talk to your accountant regarding local and state taxes.

In some states, you don't pay taxes on horse sales at all; others make you pony up only if you sell more than three horses within the tax year.

Read the next horse farms article on Barn / Hay Fire.
Register below to get
free horse tips from:

Horse eZine Cover

Over 20 years of experience selling quality horse saddles & show tack.

Huge selection of different saddle types & brands.

Family owned & operated.

Free shipping on all saddles.

Horse Saddle Shop doesn't sell any saddles, owners Dale and Chuck wouldn't buy themselves!

Visit the Horse Saddle Shop today and receive top notch advice on purchasing a horse saddle that fit your riding needs.

 Horse Education
Horse Training Teleseminar
 Horse Information Topics
Horse health
Horse nutrition / feed
Horse pasture / forage
Horse care
Horse tack / equipment
Horse diseases
Horse shoes / Hoof care
Horse rescue / adoption
Horse transportation
Horse training
Horse trainers
Horse breeds
Horse breeding
Horse names (5,000)
Horse farms / ranches
Horse barns / fencing
Horse riding
Equestrian Sports & Activities
Horse shows
Horse words dictionary
Share a Horse Story
 Horse Business Owners
  Advertise with Us
Have your horse products or services exposed to over 27,000 of our monthly visitors.
  Home | | Privacy | Security | Legal notices | Advertise with Us
 Copyright (c) 2011. American Horse Rider & Horses and Horse Information. All rights reserved.