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Be sure to keep yourself informed ontax changes and how they can benefityour business, as there are a number ofchanges that could be advantageous butothers that could serve as challenges.BettinG losses Horse racing and betting have new taxrules under H.R. 1, requiring carefulrecordkeeping. Starting in 2026, you mayonly deduct up to 90% of betting losses,and only if you have winnings that year.Previously, deductions could match thefull amount of winnings. Travel and entryfees are included in loss calculations, butthe 90% cap applies.Equine professionals, including syndicate members and handicappers, musttrack wins, losses and expenses moreclosely. For example, if you win $10,000but lose $12,000, only $10,800 may be deducted.Legislation has been proposed to restore the full deduction, but it has not yetpassed.estate tax planninG For many in the equine world, the farmis a family legacy. Planning for successionis critical for multi-generational breedingoperations, training facilities and ranches.Under H.R. 1, starting in 2026, the estateand gift tax exemption rises to $15 millionper filer, indexed for inflation, which is asignificant increase from the current $13.6million. Families can transfer land, livestock, equipment and business interestswithout triggering federal estate taxes,benefiting high-value operations.Joint filers can shield up to $30 million,creating new opportunities for trusts, lifetime gifts and restructuring. However,planning for liquidity is still important, asstate estate taxes may apply and heirs mayneed cash for ongoing operations. Reviewing estate plans now helps preserve legaciesand protect assets for future generations.clean enerGy creDit phase-out Sustainability is growing in the equineindustry, with businesses investing insolar panels, geothermal heating and energy-efficient upgrades. H.R. 1 is phasingout key clean energy tax incentives, sotiming is critical. The residential clean energy credit ended after December 31, 2025,and the commercial energy efficiencycredit ends for projects starting after June30, 2026. Equine businesses planning renovations, such as solar panels, HVAC upgrades or energy-efficient windows, needto act quickly to secure credits.Smaller improvements, like upgradingbarn office windows or lighting, mayqualify if completed on time. Some stateand local programs may still offer benefitsafter federal incentives end.1099-K reportinG thresholDs Digital payments are increasingly common in equine businesses, from onlinehorse sales to collecting training fees. H.R.1 clarifies federal Form 1099-K reportingthresholds.Under federal law, third-party platforms like PayPal, Venmo, Stripe andSquare must issue a 1099-K if over $20,000is received and more than 200 transactionsoccur in a year. This applies to paymentsfor goods and services, but not personaltransfers. Many states require reporting atmuch lower thresholds, sometimes as littleas $600.For equine professionals, this can createconfusion and unexpected reporting obligations. A breeder selling foals online ora trainer offering virtual lessons may receive a 1099-K if thresholds are met. It’scrucial to distinguish between businessand personal transactions and to track income independently.To avoid surprises, equine businessesshould:• Review platform policies and understand how payments are categorized.• Track income independently, even ifa 1099-K is not issued.• Consult state-specific rules, as thresholds vary and may change annually.• Separate personal and business accounts to ensure accurate reporting andavoid commingling funds.• Equine professionals, including syndicate members and handicappers, must trackwins, losses and expenses more closely.iDentity veriFication anD FilinG options To fight fraud and improve security,H.R. 1 introduces stronger identity verification requirements, affecting how businesses, especially those with seasonal orforeign workers, manage tax filings.These changes matter for equine operations, which often rely on temporary laborduring busy seasons.Employers must ensure all worker documentation is accurate and compliantwith federal standards, including verifying social security numbers and work authorization before filing W-2s or 1099s.Equine businesses should be proactive inonboarding and payroll processes. For example, a breeding farm hiring seasonalworkers from abroad must follow stricterverification to avoid delays or penalties.Failing to comply could result in rejectedfilings, higher audit risk or fines.58 Arizona Horse Connection February, 2026FRESH BULK PPDirect From The Saw MillDelivered Throughout Arizonacontinued on page 60