LTR Blog

AHC Update: Three-Year Depreciation of Race Horses Not Extended to 2017


AHCThe following is an announcement from the American Horse Council.

The Internal Revenue Service (IRS) has published a proposed rule regarding withholding requirements on pari-mutuel winnings. The proposed rule would make changes to withholding requirements that are more accurate and reflect the current state of wagering in the horse racing industry.  These changes, if made final, will be of great benefit to horse players and the racing industry.

Specifically, the proposed rule would define “amount of the wager” as the total amount wagered by a bettor into a specific pari-mutuel pool on a single ticket for purposes of determining whether wagering proceeds are subject to 25% withholding on winnings of $5,000 or more and are at least 300 times as large as the amount wagered.

Currently, the IRS does not recognize the total amount wagered on an exotic bet with “boxes,” “wheels,” and “keys,” when determining whether the 300:1 ratio has been met and 25% withholding is triggered, only the  cost of the individual winning bet.  This greatly increases the number of winning bets that are subject to withholding and does not accurately reflect the actual amount bet and the actual amount won.

The American Horse Council and the National Thoroughbred Racing Association have requested the IRS make the proposed change for many years.

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