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Post by p518 on Nov 12, 2014 6:47:56 GMT -6
Did you know that any national event track owner/operator who might want to sell his track is required by the U.S. tax codes to refund to the government all the money they may have kept by claiming depreciation on track equipment, etc? One track owner told me he was seriously considering an offer to buy his track until he found out that he would be forced to refund the government $1,500,000 in tax depreciation credits from whatever he is paid for the track (the IRS calls it re-claimation). No wonder major venues like E-town, Dallas, et al. don’t often (or ever) change hands.
Jeff Burk posted this on DRO.
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Post by 396z on Nov 12, 2014 14:26:19 GMT -6
I'm not a tex accountant, so I don't know of anything specific regarding racetracks. What I do know is that tax rules allow companies to take an accellerated depreciation schedule. For example, you can depreciate assets over 3 years that may last you 10 years or more. So if you sell something you bought for $100K after three years, It's on your books for $70K because every year you use up 1/10 of the 10 year useful life. Every year it's worth $10K less than what you bought it for. So if you sold it for $70K after 3 years, you break even. But for tax purposes you depreciated it over 3 years. So after three years it's on your tax books for $0 value. Now you sell it for $70K and you must pay taxes on the entire $70K. Which can obviously suck.
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