Every so often, it’s important to check your horse’s teeth. However, it seems that each state has different ideas about who should be legally allowed to examine or treat your horse’s teeth; a vet, licensed in his state, or a specialist, trained only in dental work but is NOT a licensed veterinarian. Always check before paying big bucks for the dental work needing to be done to your prize show horse.
Previous "Tips of the Month"
Every year it’s especially important to review the requirements in the IRS’ Section 183. As stated before, this section
lays out the requirements necessary in separating a horse related hobby and a legitimate business eligible for proper deductions.
It certainly is that time of year again when all horsemen need to get current with our show horse’s insured valuation plus get an appointment with your insurance person and your farm’s attorney.
Make sure the prospective buyer of your horse signs a waiver and is wearing protective headgear which they provide themselves. Under no circumstances should you provide one of your safety helmets. In addition, make sure you have the requisite liability insurance. If you are a professional and use your home owner’s policy expect the policy to be cancelled.
As we approach the year end, I’m sure your farm will be eligible for a series of award banquets. Always verify the correct number of points have been given to your horses. If you’re a professional trainer it’s always your fault if the banquet announcer gives the incorrect point count to your best client’s horse.
Keeping current records on your horses is important for any number of reasons – medical issues, sale of the horse, appraisal, etc. For safekeeping, those records should be stored in electronic and hard copy form in several locations. Digital files can be stored in the cloud online, and on storage media. Hard copies should be kept in a safe deposit box and at home/office safe for quick access.
Breeding Stock – Be informed before you buy. When purchasing breeding stock at a public auction verify that confirmation weaknesses have not been medically altered. State statutes do not always require sellers to disclose surgically corrected conformational weaknesses. Review medical records, any breeding history and check certification of DNA lineage. And, have your personal vet accompany you to verify any medical anomalies.
Safety First at Dude Ranches - A riding vacation can be an exciting adventure, but make sure that the operators are looking out for their guests. Young, old, inexperience, and experienced riders all have different requirements. Helmets must be provided and required. No sneakers/tennis shoes allowed, (no true heel on your shoe can let your foot slip through a stirrup). The wranglers must match horse to rider and should not let anyone ride alone. Other considerations: What condition are the horses in? Does the ranch supply a safety list or hold a mandatory class for guest riders instructing safety around horse? Do they carry proper insurance cover riders? A red flag should go up if they do not address any of the items above.
When hauling horses other than your own, be prepared. Consult with your insurance carrier to find out if you need an umbrella policy added to your coverage. You should also have a written agreement with the horse’s owner to establish who will be responsible in case of injury. Make sure that your trailer and towing vehicle are in top mechanical condition. You would not want to be sued due to negligence in maintaining your equipment.
When obtaining insurance for your horse business, make sure that your brokerage specializes in equine coverage. Here is a short list of coverages to consider: Commercial Equine Liability, Horse Farm Property, Horse Farm General Liability, Stallion Infertility, Equine Mortality and Theft, Care – Custody - Control, Private Horse Owner Liability, Medical, Disability, Farrier Liability, and Bloodstock Insurance. Anyone involved in the horse industry (commercial and recreational) needs to be well informed and have adequate coverage.
All verbal contracts or agreements have the possibility of becoming “WORTHLESS.” While most states may have some sort of wordage on a verbal contract, the lesson should always be that the verbal version must not be counted on to protect ones interests because every verbal agreement may be changed with a written contract.
The verbal contract will always be suspect since there may be a written version “hiding in the weeds” just waiting to pop out and derail what the verbal contract was supposed to fix.
The lesson therefore, should always be, especially where money is involved always have a written contract drafted by an attorney licensed in the state where the contract is written. State laws can influence the verbiage of the agreement.
When leasing a horse to someone, or leasing for yourself, be sure the contract stipulates all responsible parties for: insurance; mortality and liability, vet and farrier bills, when to contact the owner if the horse is injured, feeding schedule, restrictions where the horse can be ridden, and if the horse is allowed to be transported across state lines. Other documentation should include recent photographs, show records along with a current “in good health” Vet release.
When guests are at your farm for an afternoon ride, make sure that everyone wears protective head gear that complies with the ASTM F1163. All helmets should have an SEI safety tag. And note: parents cannot sign a waiver excluding their child from wearing a helmet.
Tax season is coming up. Be sure that you and your CPA review Section 183 of the IRS tax code which outlines nine items deemed necessary when claiming your horse business deductions. “Heads up” regarding Section 183 of the IRS Code, factor #2 examines "The Expertise of the Taxpayer or His Advisors”; document what you have learned and put in place throughout the year to run your horse business profitably to meet IRS requirements.
The responsibilities when operating a commercial stable includes proper maintenance of tack. If a patron is injured while riding and tack malfunctions, you could be headed for a lawsuit. Un-maintained tack equals negligence on your part.
Your insurance company should be made aware of the safety procedures used at your horse barn. Be sure that written policies are available to anyone involved in activities at your facility. This will go a long way in mitigating your liability if and when someone is hurt.
When purchasing horses overseas, remember that most countries do not follow the AAEP minimum standards. Have all vet records sent to your veterinarian for evaluation. However, if budget permits, it is best to have your own vet do an on site evaluation prior to your purchase. Besides your vet’s involvement, insure that your lawyer reviews the sales agreement since purchases overseas are covered by their country’s laws which may not stand up to adjudication in a U.S. court.
Even though states and their equine statutes recognize verbal and non-written agreements, it is imperative to have a written agreement signed by both parties. If there are changes, both parties must sign off on them as well. Be sure to have an attorney prepare the contract or at least review the document. If an issue arises, the written agreement takes precedence over a “hand shake”.
Each month I post a tip that may help you in your horse activities. Some of these seem to come up now and then…”Don’t let inaccurate healthcare records stop you in mid campaigning for end-of-season points because a vaccination was missed and now your horse is stall bound for the rest of the season. The lesson: Keep better records than your vet”.
When you are out of town and having someone taking care of your horses, make sure that you have a written schedule of duties for feeding, turnout, contact and emergency plan. The schedule should be signed by both parties and there should also be a third party who oversees and insures that the safety and care have been delivered.
Every horse owner should have a plan for emergencies and updated annually. What you should have in place - Plans for Evacuation, Communication, Contacts, Transportation, Identification, Medical Records and Photos, Supplies, and a back up plan. Here are four resource links that will help you identify and create a plan to fit your needs: AAEP - UCDAVIS - AVMA – FEMA
To insure an accurate appraisal on your Warmblood, verify credentials and ask if the appraiser is familiar with your specific breed. Do they have the professional knowledge in Breed Standards, Keuring (KWPN & KWPN-NA) and specific disciplines? Are they well versed in understanding medical records and assessing show records?
Horse related jobs are often performed by junior riders for compensation. This can present a problem after they turn amateur and continue working in the same related duties. The USEF rules have very strict guidelines in defining amateur versus professional status. Junior riders should be aware of these rules and know the ramifications. Questions regarding amateur/professional rules can be sent to email@example.com
One of the most important items before you file a lawsuit is to create a living, descriptive account that recalls everything concerning your case. It will enable your legal team and experts to get up to speed on your case and will help save time and precious dollars. Taking the time to map out your case helps immensely in you winning at trial or accepting a good settlement.
The Tip of the Month for March is one I’ve repeated before. Always be careful to have lawyer-prepared lease agreements for any of your horse temporary activities. These would include showing a client’s horse and training at an event. It’s so important to protect your livelihood in case “the worst” happens. This is also a great time to review all your insurance documents.
Tax season is here and you may want to consult with your CPA regarding IRS Section 1.183 and/or the "passive loss" in
IRS Code 469. The code relates to your ability to demonstrate your deductable "material participation" in 7 regulatory tests.
Remember that Breed Associations only shows the registration of the horse and does not certify who owns the horse.
To prove ownership, keep copies of your notarized bill of sale with you and with the proper authorities such as your attorney.
Does your accountant understand the IRS' Section 1.183?
These points must be addressed when you are operating a horse related business.
Running an equine association or rescue requires volunteers for various duties. Don't forget to have all volunteers sign a waiver and be thoroughly familiar with horse safety protocol. Keep the records archived for potential legal matters.
Care, Custody & Control (CCC) Insurance should be in effect at every commercial stable, but make sure you have high enough limits: as your business progresses the value of horses you train or haul goes up. Not having enough CCC Insurance can mean claims not being paid.
When it comes to showing your fabulous show horse, adequate mortality and major medical insurance will take a lot off your worry list. Mortality insurance is quoted at a percentage of the agreed upon value and major medical is priced often at a flat fee.
Summer time gets families going on trail rides. This is not the time to forget the safety of helmets for all family members. Visiting sisters or brothers in the hospital is not a good way to spend those days off.
Summertime is often the time to lease out your horse to a college student home for the summer break. Such times require you have a well prepared release to protect you should your horse or the home-for-the-summer rider be injured.
President Reagan always used the old Russian slogan “Trust But Verify.”
The same slogan always applies when buying a horse.
As a stable owner I sure hope you’re keeping track of every single last item to be deducted. Giving your CPA an organized, well-prepared list to deductions goes a long way in receiving a big fat refund.
If you earn your living as a professional horse trainer, accident costs can quickly escalate. Make sure Care, Custody and Control insurance is at the top of your list just for peace of mind’s sake.
It is tax season and under Section 183 of the tax code, the IRS uses nine factor tests to determine if a horse operation is conducted for profit or as a hobby. In particular, 183-3 mentions time and effort expended by the taxpayer in carrying on equine business activity i.e., show ring success, and time in marketing your operation.
It’s very important to pay close attention to what your horse eats. The science of feeding to win has come a very long way in the recent years. Keeping track of your horse’s protein intake can vary so much from the trail horse to the open jumper; pay attention.
The end of 2013 and the beginning of 2014, a new year, is a great opportunity to carefully review your stable’s safety procedures. Always make sure to have an accident form handy for your instructors to use if an accident occurs.
The importance of full disclosure in all dealings regarding your horse purchase is so important. Just because the trainer or agent is very kind does not remove their responsibility to accurately and honestly tell you all the information concerning your horse purchase. In other words, “Trust but Verify,” to quote a former President.
Your posted barn safety rules are so important. From the first day a boarder brings their horse and during their entire stay, the boarder should be able to recite your barn safety rules by heart. This will help your case in any potential insurance claims.
The ”Tip of the Month” has been an important part of the NAES web site for many years. You must have figured out by now that the “tips” are, in most cases, just plain common sense. If you see every horse related item from a “common sense” approach, for the most part, your history in horses will be good.
Valuating your horses with an eye for future business and tax consequences is important. Make sure you clearly anticipate the need for justifying your horse’s value so you are not caught off guard and with limited time to complete an acceptable appraisal.
When offering your horse for sale you must demand that potential buyers sign a release and wear protective headgear. Accidents happen and you must be prepared to “look out” for your “invitees” to your premises when trying your horse for sale.
In buying and selling a horse, large sums of money are often exchanged. It’s so important that all the relative documents be exchanged. The bill of sale (signed by both buyer and seller) and registration records must be exchanged. Don’t assume that the paid seller will always forward the registration just because they say they will.
When renewing your horse’s mortality insurance remember that any prior year’s illness from colic, etc. must be reported. If your horse has been previously treated for colic, the illness must be reported. If your horse dies later in the calendar year, your state’s statutes may not require the insurance company to pay your mortality claim.
Accidents do happen. Make sure you have a hold harmless release drawn up by your family or company attorney when your horse is in third party hands. Always prepare for the worst and be pleased by the best. Remember that we live in a very litigious society; you must protect yourself. Don’t be ill prepared.
Throughout the United States certain veterinary procedures require written authorization before the veterinarian picks up that scalpel; make sure you’re aware of which procedures require your signature first in your state.
Tax season is a great time to remind yourself to review your horse insurance. We know you hate to even think about losing your “special friend” so make sure you know the difference in “full mortality” or “loss of use” policies.
The early part of the calendar year necessitates that you prepare for those all-important first shows. Make sure that if you’re hauling horses you protect yourself with lawyer prepared contracts.
As you compete in various activities with your favorite horse always remember to demand full disclosure in each and every transaction you perform. Do not ever hesitate to call for free advice because I always have an eye out for you protection.
In all your horse dealings demand full disclosure. Accepting the seller’s agent saying that the pre-purchase vet passed the horse you’re buying isn’t enough…confirm with the vet himself or herself.
The responsibility of the horse’s owner is so important. Especially important is keeping track of as many identifying data as possible including feed. That way if the horse becomes ill you can easily trace the background of the feed because you have lot numbers, etc.
Always keep an extra set of your horse’s papers handy. Trying to find old bills of sale and registration papers is your duty as a horseman. Just imagine yourself flinging papers around as you attempt to justify your show horse’s value for an insurance increase.
Selling agreements are very important so do not neglect them. In fact having your attorney draft one makes sense.
List all the items you need to keep in mind since this is your one chance to specify everything you want the transaction to reflect. Do not be so elated that your horse is sold that you skip the important facts which could come back to haunt you later.
Hauling someone else’s horse is a huge responsibility. Make sure you have a signed release by the horse owner and additional insurance to protect you. These two items are very important.
Buying horses over the web still truly amazes me. A kind father called last week regarding a lame horse bought by his 18 year-old daughter. She had already paid the previous owner when the veterinarian discovered very bad hoof issue; go figure why you’d buy a horse before the pre-purchase exam! (Please call me any time you have even the smallest question for a NO CHARGE comment…I do not mind in the least!).
The NAES TIP OF THE MONTH for June must focus on the way clients of pros are regularly cheated out of thousands and thousands of dollars during horse sales. Always verify sale prices and veterinary pre-purchase exams. Read carefully this month’s true CASE OF THE MONTH. Please call me any time you have even the smallest question for a NO CHARGE comment…I do not mind in the least!).
Most states have statutes that address feed or stablemen’s liens; know them well. You can find the statutes for your state on my website under the Litigation Consulting pull down menu.
The horse training business is certainly like none other. However, the business you have depends on your honesty since your character goes a long way in influencing your clients and competitors…plus getting more clients.
If you’re getting a divorce, hopefully you have planned ahead to make sure you’re listed as “owner” on the registration papers. I know it sounds crass, but thinking ahead, even in community property jurisdictions, can save your sanity and a legal nightmare after the marriage goes south.
Keeping track of all your receipts and bills is priority in assuring all deductions get recorded. Perhaps it would be wise to use a desktop scanner to scan and store documents into separate journal accounts.
Wanna save some money?.......If you’re considering buying or leasing a new horse please call me morning, noon or night
(as the saying goes). I’ll be more than happy to give you a totally unbiased view on items you’ll need to look for.
I even have a toll-free number: 800-575-1669
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Every month I give a tip that may help you in your horse activities. I never tire of relating instances that seem to happen
over and over. This month’s tip is to never rely on “verbal” or non-written agreements even though states have statutes
that address them. Always have a written agreement and make sure both parties sign off on any changes, too.
Naturally, having an attorney prepare the contract is very wise.
I cannot stress enough the importance of quality photos in recording your horse’s talents. Please note the accurate timing of Ms. Lili Weik’s picture of this month’s HORSE OF THE MONTH. Pictures such as this help in winning cases when necessary. Such talent takes many hours and a special gift.
Pictures and videos chronicling a horse or rider’s performance can be critical in determining damages.
Becoming fast friends with the horse show photographer is expensive but crucial at trial.
Fraud in the horse business is alive and well as I just found out after having received a multi horse case from New York.
The warning should be very plain; always verify every point of the sale transaction, then call me, Dave Johnson,
Numerous saddles and bridles have been stolen by some very creative thieves in California lately. Always lock and check the security of tack-rooms or tack-trunks. One of the best protections is a Doberman. Thieves walk around dog-protected areas.
Tip of the month for July 2011 revolves around the always mysterious procedure of creating some sort of document,
signed by both parties, memorializing your horse transaction and prepared by an attorney; just do it!
The very recent outbreak of EHV-1, (a mutant form of RHINO), should remind us all to be fastidious in cleaning every horse, all surrounding areas and especially YOU!
You and your trainer both need to review your new horse’s pre-purchase exam especially if there’s an item that’s not within accepted norms. You both need to agree on what you can and can not live with.
Several years ago I wrote on the increase use of horse leases. You, the owner, must specify all you can imagine when identifying what the lessee must do for then duration. Use your attorney to put in everything possible.
ALWAYS have Section 183 and its nine points at the forefront of your stable’s planning. As many times as I remind stable owners there are always those who fail to plan. In other words, “bug your CPA”.
Healthcare for your show horses is so important since campaigning for end-of-season prizes can sure be messed up by sicknesses created because a vaccination was missed. The lesson: keep better records than your vet.
The Case of the Month for January, 2011 involved a spectator who was not aware of a polo match being played right next. The tip is simply to “pay attention” to your surroundings. Accidents seem to happen to those who are unaware.
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We’re coming up on the year’s end. Planning your horse show activities will in large part be affected by the continuation of US tax policies. Stress to your Senator or Representative the importance of “doing what’s right” for our country and horse economy.
Always get pictures or video recordings of your favorite horse or horses. You’ll never know when they might come in handy. Even if the video recordings are by your cel-phone…GO FOR IT!
The most recent Horse of the Month reminds us of the need for disclosing every medical-related call on the insured animal. Equine insurance companies can refuse coverage if even one visit is undisclosed thereby spelling trouble when a claim is made.
Sending your horse to an agent to sell does not relieve you
of making sure your horse is marketed honestly. Always have
a written agreement with the agent. Remember the agent equals
“YOU.” You can still be sued if your agent lies or cheats.
International horse events can give all of us local equestrians
an upper level target at which to aim. Much can be learned from
watching the top international contestants. The World Equestrian
Games will be held at the Kentucky Horse Park in late September,
At the recent University of Kentucky symposium on equine law some of the top tax attorneys expressed great concern over the new aggressive nature of the IRS. Independent contractor status will be closely examined. IRS estimates that FICA taxes are short by $14 billion.
Every Time, Every Ride chronicled head injuries sustained by all ages and experience levels of riders.
Head injuries still occur way too often; the latest was to a dressage Olympian on March 8th , 2010.
Driving your 4 or 6 horse rig into some states requires a CDL, (Commercial Drivers License). Don’t let some arcane license requirements spoil your horse showing experience. In other words, check each state traveled.
In a "down" economy it is becoming common to find sale horses for "rock bottom" prices or "FREE" for the taking.
ALWAYS insist on the legally transferred registration papers. Remember, those papers are needed for breeding
and "breed-specific" horse shows.
NAES has been doing our Qualified appraisals for over 30 years but never have we done more “lease horse” appraisals.
If you’re the owner be very specific as to the lease contract. I know you want the horse “out the door” but make sure your attorney takes the time.
Tax time is appropriate to review the “passive loss” IRS Code Section 469, enacted in 1986 and blamed for the horse recession starting that year. Demonstrating your deductable “material participation” in the required 7 regulatory tests is paramount; know them!
Because of worsening economic conditions police are responding to many more stolen truck reports. Many vehicles mostly high end trucks are stolen from horse show hotels. Always use “The Club” or similar steering wheel blocker.
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It always amazes me that written contracts aren’t demanded of every “deal.” Even on “small” transactions
…demand them in writing.
Horse owners often develop their hobby into a business but so slowly they're unaware they've become a commercial entity.
Always keep your CPA and the requirements of IRS Sec. 183 in mind; it could save you lots of dollars.
Your home farm’s horse business may grow so much that the normal homeowner’s insurance won’t take care of claims the insurance company determines to be commercial in nature. Keep the insurance person advised.
Are you planning to get an NCAA Equestrian Scholarship under US Title 9 for your post-junior child rider? For kids going to school in the fall it’s probably too late but there may be a “walk-on” as defined by the NCAA; check with the school available.
Assuming that your friend won’t sue you when their horse is hurt in your trailer is so naive. Insurance to protect you and a signed release by the horse owner are very important.
Operating a boarding stable in a down economy can be rough. Get references from previous boarding stables. If the prospective boarder has been slow before…they’ll do it again. “Trust but verify,” (President Reagan after Reykjavik talks).
With the economy in a slump the boarding stable needs to be assured of prompt payment by its boarders. Each state has statutes that address feed or stablemen’s liens; know them well.
Because of the US Title 9 requirements for colleges and universities, young women are being welcomed with open arms into schools offering fully paid tuition and board; what an opportunity!
Horse association memberships may offer secondary liability insurance. If you’re found at fault in an accident, this insurance may come into play.
Horse rescue groups are popping up all over. However, please be prepared to do the most due diligence possible; just because the horse is inexpensive don’t believe everything that’s told to you.
As the horse show season begins, its imperative the owner verify items on their horse's entry blanks. The trainer (who often fills them out) may make an error which could penalize the owner.
Mission statements for so many horse associations focus on the animal's well being not financial rewards. Your goal should be to always look out for your horse's safety since it aids you as well.
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Boarding stable owners have to be expert in their own state’s feed lien laws, (sometimes called agister’s laws). Local attorneys and county clerks usually won’t have the foggiest idea what they require.
Equine mortality insurance sometimes gives you the option of a “loss of use” endorsement. Just because your show horse can’t do everything he used to do, doesn’t always mean you collect.
Our children and horses are special. Looking out for our horse’s safety means safety for the rider as well. Rules for each sport should be aimed at protecting both.
Buying your new show horse requires confirmation that no previous association penalties have been applied. If the horse has been previously “set down” it may mean the horse cannot now compete without a “suspension release.”
Because the cost of a lawsuit is so steep make sure your "horse transaction" is memorialized with lawyer-prepared, well-written contracts. The small contract prep charge will be a fraction of litigation expenses.
Full disclosure regarding your horse purchase is a necessity. Knowledge and verification of previous ownership, veterinary and show records will prove so helpful should problems occur.
As the seller in a horse deal you must be aware of your agent’s actions. Some states can actually charge you with complicity if you know or should have known of illegal actions by your agent.
When consulting your lawyer regarding a possible horse-related case, make sure and explain yours and the opposing arguments completely. Your written account of all the facts including names, addresses and phones can save your attorney much in hourly charges to you.
Since the horse anti-slaughter acts are being enforced, be very careful to which rescue barn you donate your horse. Verify the conditions and their compliance with IRS Rule 501.(C), 3.
The IRS likes to see growth in the value of your horses, (capital appreciation), each year. Significant sales and Qualified Appraisals can ease your burden of proof.
Section 183 of the IRS ‘s tax code outlines nine items it deems necessary when claiming your horse business deductions, (Sec. 1.183-2). Now’s the time to review them with your CPA.
When receiving a veterinary report of a pre-purchase exam make sure you, the prospective buyer, understands the language thoroughly.
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Breeding popular stallions has become a very lucrative industry, particularly for the top stallions. However, conformation weaknesses can show up in strange genetically linked qualities which you'll have to pay to get fixed. State statutes do not always require sellers to disclose surgically corrected conformational weaknesses.
Your signed boarding contract is very important. Jurisdictions may allow ownership to pass to you after a certain number of days of abandonment or non-payment of past due bills.
When discussing a rival’s horses, be careful to not disparage them; it may come back to haunt you in the form of a slander suit from the competitor.
Junior riders are often remunerated for horse-related jobs. A problem can occur after they turn amateur and continue those same paid activities. Associations are very strict on amateur vs. professional status; make sure you know the rules.
If you board horses on your property it may be a good idea to have vendors such as farriers name you as an additional insured when coming on to your property to shoe your horses.
The Bill of Sale is all-important. It is a legal document showing value, ownership (not the registration papers), and is the only document proving your ownership. Always have an attorney draw it up.
Secret commissions and hidden profits are prevalent in the horse business; be aware. Insure that you have direct communication with the horse owner.
Shopping for horses on the Internet is so simple...but a magnet for fraud. ALWAYS verify information supplied to you. Remember not to believe everything that you read.
Horse leases involving the payment of expenses must specify remedies for numerous "what-ifs." Make sure you both agree on what is to happen if the horse dies, gets sick, goes lame, etc.
Be sure to draw blood on your new horse's pre-purchase exam to verify there are no forbidden substances as defined by the USEF.
EHV-1 herpes virus has now struck some Northern California racetracks. Some of the symptoms can be vaccinated against so forewarned is forearmed. In addition, quarantine any new horse in your barn.
When receiving a veterinary report of a pre-purchase exam make sure you, the prospective buyer, understands the language thoroughly.
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Before branding your warmblood with a mark, verify through DNA that the breed is authentic.
Re-evaluation of your horses for tax purposes is important in maintaining IRS 183 provisions; a Qualified Appraisal at year's end can aid your business deductions.
Make sure foreign veterinary exams and x-rays are sent for final assessment to your own stateside veterinarian.
A previous case of mine involved my client/defendants’ misplacing the appropriate liability waiver, (they are like gold since a signed waiver often precludes suits).
Breed registrations, like Quarter Horse, American Saddlebred, etc. are never proof of who actually owns the subject horse; but the bill of sale is.
Make sure your vet examines all medical records from the previous owners. They will aid in focusing the pre-purchase examination toward possible soft tissue injuries requiring ultrasound tests.
An overseas horse purchase demands due diligence. The US market price and your own vet’s assessment are really what count. NEVER count on a vet in a foreign country to look out for you.
IRS Section 183, #3 mentions the importance of "...time and effort expended by the taxpayer in carrying on the activity." Show ring success and time spent aids in marketing your operation and meeting IRS requirements.
Hold-Harmless waivers for businesses working with minor children should be signed by both parents. Many states require both parents to sign the waiver. You could be sued by the parent who "didn't" sign.
Under Section 183 of the IRS Code, factor #2 looks at "The Expertise of the Taxpayer or His Advisors." Make notes of things you learn to run the horse business profitably.
Legally speaking, the general and USEF mandated use of an ASTM-approved helmet just makes sense. Using such head gear goes a long way toward showing your concern for safety. (See GR318.3)
Resolve for the New Year to know the particular association rules under which you show. It would be embarrassing to find out at year’s end that points “earned” won’t count because of an oversight 12 months earlier.
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When breeding your prize mare be aware that mistakes can be made in assigning the stallion you wish to breed to your horse. Always get a DNA test to confirm the exact parentage.
Sending your horse to someone else to sell necessitates a contract spelling out who is responsible for vet bills, showing costs, mortality insurance, etc. A hand shake will not hold up in court.
When showing your horse to a potential buyer, demand they wear a helmet especially if the buyer is a minor. For children in NY 14 and under, helmets are mandatory!
If you have to “evict” a boarder, it might be a good idea to get a health exam, proving their horse was healthy when it left your care.
Make sure each of your guests at your farm signs a waiver before riding one of your horses. Minors MUST wear a helmet and their parents must sign the waiver.
Section 183 from the IRS is the “# 1 punch” for your horse business. The “#2 punch” is Section 469, the “Passive Loss” provision which you and your CPA must address.
Today, many horses receive feed supplements. Keep track of all ingredients; it may help your vet diagnose a toxic feed problem.
Insurance companies are very concerned about your horse barn safety procedures. Having and using a written policy can go a long way in mitigating your liability if and when someone is hurt.
Horses purchased overseas are covered by their country's laws which may not stand up to adjudication (if necessary), in a US court. Ask your lawyer to review the sales agreement.
IRS audits are handled much easier if you have a pre-approved baseline appraisal on your horses. This gives you and the IRS an idea of what your capital is worth.
Hauling someone else's horse? Make sure you have a written agreement absolving you of any responsibility.
Closing the sale on your horse requires that "all" the monies come to you first. This enables you to directly pay commissions and fees.
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Buying a horse requires another pair of "eyes". Pay your trainer to help; it is well worth the cost.
The sale/purchase of your horse, even if inexpensive, ALWAYS requires a written not verbal, legal agreement.
When transferring horse ownership always use Qualified Mail or a reputable overnight service. By doing so, you will have documented records.
Always notify your horse insurance specialist immediately when a new horse is purchased. Your agent will often "bind coverage" over the phone.
Unable to find a "horse attorney" near you? Not to worry, an attorney skillful in preparing contracts will do the trick.
Full disclosure in the purchase/sale of horses is absolutely imperative. Your trusted trainer should readily agree with this requirement.
Unable to find a "Horse Attorney" near you? Not to worry, an attorney skillful in preparing contracts will do the trick.
Horse insurance protects you from the loss of your horse. Make sure you know the different "full mortality" or "loss of use" policies.
Accurate appraisals are highly dependent on a horse's performance. Always have your favorite horse photographed and videotaped.
More judicial agencies are requiring Qualified Horse Appraisals. The appraisal from the horse pro down the street will not qualify.
Pre-purchase vet exams are important; do not let a seller get by on the less rigorous "insurance" exam.
December 2003 and January 2004
When buying a horse, a legal and binding full-disclosure contract protects both the buyer and the seller.
In order to take a tax deduction greater than $5,000 on a donated horse, the IRS requires a Qualified equine appraisal.
Does your CPA fully understand the IRS' Section 1.183? These points will affect your horse business.
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