Exercise Sound Business Judgment
· Open separate bank accounts for all equine business activities.
· Maintain complete and accurate financial books and records.
· Employ professional advisors when necessary.
· Document the number of hours spent on your equine business activities.
· Save all business-related bill and receipts.
Insurance Concerns
As an owner, you will need to decide whether or not to insure your equine investments and activities. Insurance can be purchased or an owner can choose to self-insure. We recommend you consult with an equine insurance professional before deciding whether and how to insure your equine activity.
As an owner, you should be familiar with several types of insurance:
Licensing
In order to race a Thoroughbred you must possess a valid owner's license from the state in which you wish to race. In many states, each member of a partnership or syndicate must be licensed. Licenses can be issued by state racing commissions or the National Racing Compact. The National Racing Compact is an independent, interstate governmental entity, composed of pari-mutuel racing regulators from participating states that can issue a national license which will be recognized by all participating states and other states that may elect to recognize the license.
Tax Issues
Pay particular attention to tax-related issues in operating your stable. Although some consider the applicable tax code provisions onerous, they are, in reality, manageable. However, it is most advantageous to be familiar with the provisions most commonly applicable to this business. They are the difference between long-term capital gains rates and ordinary income tax rates and the hobby loss and passive loss issues.