[Congressional Record Volume 151, Number 105 (Thursday, July 28, 2005)]
[Senate]
[Pages S9293-S9294]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. McCONNELL (for himself, Mrs. Lincoln, and Mr. Bunning):
  S. 1528. A bill to amend the Internal Revenue Code of 1986 to provide 
for the tax treatment of horses, and for other purposes; to the 
Committee on Finance.
  Mr. McCONNELL. Mr. President, I rise today to introduce the Equine 
Equity Act of 2005 with my colleague from Arkansas, Mrs. Lincoln, and 
my colleague from Kentucky, Mr. Bunning.
  Each spring on the first Saturday of May, the sporting world turns 
its attention to my hometown of Louisville for the annual running of 
the Kentucky Derby. It has been appropriately called ``the most 
exciting two minutes in sports,'' and has given us such great champions 
as Secretariat, Seattle Slew, and Smarty Jones.
  The activities surrounding the Derby also allow Kentucky to show off 
one of its signature industries, the horse industry. Long after the 
pageantry and festivities of Derby day, the horse industry remains a 
vital part of Kentucky's economy and cultural heritage. Horses are 
Kentucky's largest agricultural product. The horse industry contributes 
$3.5 billion to Kentucky's economy, and directly employs more than 
50,000 Kentuckians.
  While many Americans appropriately identify the horse industry as one 
of Kentucky's signature industries, the industry's economic impact 
extends well beyond the borders of the Commonwealth. A recent economic 
impact study by the firm of Deloitte Touche Tohmatsu found that the 
horse industry contributes approximately $39 billion in direct economic 
impacts to the U.S. economy each year. The industry sustains 1.4 
million full-time equivalent jobs each year, with over 460,000 of those 
jobs created from direct spending within the industry.
  Nearly 2 million Americans own horses, either for racing, showing, or 
recreational purposes. While the popular image of horse owners might 
focus on Millionaire's Row at Churchill Downs on Derby Day, the facts 
tell a different story. Only about one-quarter, 28 percent, of U.S. 
horse owners have incomes greater than $100,000. More than one in every 
three, 34 percent, horse owners has an income of less than $50,000.
  Like many businesses, outside investments are essential to the 
operation and growth of the horse industry. Without investors willing 
to buy and breed horses, it is impossible for the industry to thrive. 
Unfortunately, there are several unfair, unwise provisions in Federal 
law that discourage investment in the horse industry.
  In an effort to address these concerns, today I introduce the Equine 
Equity Act with my colleague from Arkansas, Mrs. Lincoln, and my good 
friend from Kentucky, Mr. Bunning. The Equine Equity Act includes three 
key provisions.
  First, it will provide capital gains treatment for horses that is 
equal to other investments. Nearly all capital assets are eligible to 
receive more favorable capital gains tax treatment once they are held 
for 12 months. However, horses and cattle must be held for 2 years to 
receive capital gains treatment. This legislation would reduce the 
capital gains holding period for horses from 24 months to 12 months.
  Second, it will apply equal depreciation standards for all 
racehorses. Current law states that racehorses that begin training when 
older than 24 months of age are depreciated over 3 years, while those 
horses that begin training before reaching 24 months of age are 
depreciated over 7 years.
  Most horses begin training before they reach 24 months, but their 
racing careers do not last 7 years. This legislation would reduce the 
depreciation period for racehorses to 3 years to more accurately 
reflect the racing life of horses.
  Finally, the Equine Equity Act would establish equity in eligibility 
for disaster assistance between horses and other livestock. Most 
livestock, beef, dairy, sheep, and goats, are eligible for Federal 
disaster assistance during a drought, but horses are not. This 
legislation would make horses eligible for disaster-assistance programs 
offered by the U.S. Department of Agriculture.
  I appreciate the willingness of my colleagues from Arkansas and 
Kentucky to join me in introducing this legislation of tremendous 
importance to our States. I look forward to working with them and our 
colleagues in the Senate to enact this bipartisan bill into law.
  Mr. McCONNELL. Mr. President, I ask unanimous consent that the text 
of the bill be printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1528

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. SHORT TITLE.

       This Act may be cited as the ``Equine Equity Act of 2005''.

     SEC. 2. 3-YEAR DEPRECIATION FOR ALL RACE HORSES.

       (a) In General.--Clause (i) of section 168(e)(3)(A) of the 
     Internal Revenue Code of 1986 (defining 3-year property) is 
     amended to read as follows:
       ``(i) any race horse,''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to property placed in service on or after the 
     date of the enactment of this Act.

     SEC. 3. REDUCTION OF HOLDING PERIOD TO 12 MONTHS FOR PURPOSES 
                   OF DETERMINING WHETHER HORSES ARE SECTION 1231 
                   ASSETS.

       (a) In General.--Subparagraph (A) of section 1231(b)(3) of 
     the Internal Revenue Code of 1986 (relating to definition of 
     property used in the trade or business) is amended by 
     striking ``and horses''.
       (b) Effective Date.--The amendment made by this section 
     shall apply to taxable years beginning after December 31, 
     2005.

     SEC. 4. LIVESTOCK ASSISTANCE.

       (a) In General.--In carrying out a livestock assistance, 
     compensation, or feed program, the Secretary of Agriculture 
     shall include horses within the definition of ``livestock'' 
     covered by the program.
       (b) Conforming Amendments.--
       (1) Section 602(2) of the Agricultural Act of 1949 (7 
     U.S.C. 1471(2)) is amended--
       (A) by inserting ``horses,'' after ``bison,''; and
       (B) by striking ``equine animals used for food or in the 
     production of food,''.
       (2) Section 806 of the Agriculture, Rural Development, Food 
     and Drug Administration, and Related Agencies Appropriations 
     Act, 2001 (Public Law 106-387; 114 Stat. 1549A-51) is amended 
     by inserting ``(including losses to elk, reindeer, bison, and 
     horses)'' after ``livestock losses''.
       (3) Section 10104(a) of the Farm Security and Rural 
     Investment Act of 2002 (7 U.S.C. 1472(a)) is amended by 
     striking ``and bison'' and inserting ``bison, and horses''.
       (4) Section 203(d)(2) of the Agricultural Assistance Act of 
     2003 (Public Law 108-7; 117 Stat. 541) is amended by striking 
     ``and bison'' and inserting ``bison, and horses''.
       (c) Applicability.--
       (1) In general.--This section and the amendments made by 
     this section apply to

[[Page S9294]]

     losses resulting from a disaster that occurs on or after the 
     date of enactment of this Act.
       (2) Prior losses.--This section and the amendments made by 
     this section do not apply to losses resulting from a disaster 
     that occurred before the date of enactment of this Act.
  Mr. KYL. Mr. President, today: I am pleased to join with Senator 
McCain to introduce the City of Yuma Improvement Act of 2005. This bill 
authorizes the conveyance to the city of Yuma of six small parcels of 
Federal land currently held by the Bureau of Reclamation in exchange 
for three railroad parcels owned by the city on which the Bureau of 
Reclamation rail line exists. A companion bill has already been 
introduced in the House by Congressmen Grijalva and Franks.
  These land conveyances will enable the city to complete the 
redevelopment of the riverfront in downtown Yuma. The Riverfront Master 
Redevelopment Plan was approved by the City Council in November, 2001. 
The plan was developed through a joint planning process with the city 
and the developer. The city's responsibility is to amass the property 
along the riverfront. The developer must raise the needed capital. The 
redevelopment includes the development of a welcome center, a new 
hotel, a conference center, and mixed-use retail stores. This 
redevelopment is designed to connect Main Street with the Heritage Area 
and the river to enhance the quality of life of Yuma's citizens and one 
of the primary economic assets of the area--tourism.
  Most of the land in this 22 acre area is already city-owned. However, 
the Bureau of Reclamation does own several parcels within the 
redevelopment area that the city seeks to acquire. Since 2001, when the 
redevelopment plan was approved, the city and the Bureau have been 
working together to effectuate this acquisition for this public 
purpose. These efforts include: relocating, at the city's expense, the 
Bureau facilities that were within the redevelopment area and 
completing the necessary environmental analyses of the project area, 
including historic resource studies, site assessments, and asbestos and 
lead-based paint inspections.
  Essentially, the deal is complete with one exception: the authority 
to accomplish the conveyances. Currently, the Bureau of Reclamation 
does not have the authority to exchange the lands it possesses for the 
railroad parcels it seeks--it must be done legislatively. There is 
broad support in Yuma for this legislated land swap given its public 
purpose objectives, thorough planning, and the economic opportunity it 
brings. I hope my colleagues agree and will work with me to pass this 
legislation this year.
                                 ______