by Jane Seigler, MHC
The pandemic relief package just passed by Congress and signed into law on December 27 includes some significant provisions for horse people. These include an extension of the three-year depreciation credit for race horses, through 2021, and some expansion and clarification of the Paycheck Protection Program. The American Horse Council’s Tax Bulletin describes the PPP changes:

“PPP Loans – Tax Treatment and Eligibility
In addition to authorizing an additional $284 billion in “second draw” PPP loans, the law states “that gross income does not include any amount that would otherwise arise from the forgiveness of a PPP loan.” This provision also clarifies “that deductions are allowed for otherwise deductible expenses paid with the proceeds of a PPP loan that is forgiven.” Congress enacted these clarifications to push-back on IRS guidance that created confusion over business deductions as they relate to PPP loans.  The provision is retroactive to March 27, the date of enactment of the original “CARES Act.”  The law also clarifies “the coordination between the Employee Retention Tax Credit and the PPP by allowing access to both programs while preventing a double dip.” 

Unfortunately, the package does not extend PPP eligibility to all 501(C)6 organizations, per industry advocacy.  In a “glass half full” scenario, the bill subjects 501(C)6 groups to the criteria below:

• The organization does not receive more than 15 percent of receipts from lobbying;
• The lobbying activities do not comprise more than 15 percent of total activities;
• The cost of lobbying activities of the organization did not exceed $1,000,000 during the most recent tax year that ended prior to February 15, 2020; and
• The organization has 300 or fewer employees.

Also, it appears that lawmakers have omitted 501(C)5 groups from PPP, contrary to horse industry and Farm Bureau advocacy that took place through the end of last-minute negotiations.  Although Hill sources have not yet addressed this apparent omission, in the past lawmakers have disagreed over whether labor unions, which classify as 501(C)5 groups, should qualify for the same treatment as agriculture groups, which also classify as 501 (C)5.”