Jeff
Nitro Member
- Joined
- Aug 18, 2006
- Messages
- 1,203
- Age
- 61
- Location
- Magnolia, Texas
Below is analysis of where our Congressmen stand in considering extending tax favored status to the depreciation of racetracks. While we are blessed with many tracks around Houston, it's always nice for Congress to recognize the positive economic impact that a nice track has, and to provide the ownership an incentive to make the capital outlay.
I clipped this from one of the many tax accounting news services that hits my e mail every few hours. Definitely not as exciting as T Ped's ride Sunday, but to some it may be an interesting read.
Bogged down by disagreements over whether to apply "pay as you go" budget rules to an alternative minimum tax patch, Congress ended 2007 without addressing the so-called extenders, a sizable package of temporary tax provisions that expired at the end of the year. More than 35 one-year extenders were added to H.R. 3996 at a cost of $ 21.14 billion over 10 years, according to the Joint Committee on Taxation; however, the extenders were stripped from the bill so a one-year AMT patch could be enacted. Congress is expected to take up an extenders package this year to address those expired provisions.
The list of extenders covers a wide range of issues, from tax incentives for charitable deductions to disaster relief to addressing the accelerated depreciation rate for restaurants. And while House Ways and Means Committee Chair Charles B. Rangel, D-N.Y., and ranking minority member Jim McCrery, R-La., have expressed interest in examining -- and possibly eliminating -- some of those provisions, one could argue history -- not to mention the lobbyists and constituents who fervently defend their chosen incentives -- is against them.
Tax Analysts is taking a closer look at some of those measures in an occasional series about the who, what, and how behind some of the less-talked-about provisions.
Each of them has a story.
*****
Racecar enthusiasts -- aka "NASCAR dads," a large sports fan base courted during the 2004 elections as an influential political constituency -- are the driving force behind a temporary tax provision that allows motorsports facilities to claim a seven-year depreciation rate schedule.
For almost 20 years, motorsports facilities claimed the seven-year depreciation rate under the "Theme and Amusement Parks" assets class, according to a paper from the Motorsports Coalition, an industry association. By 2003 the IRS had begun to take a closer look at that practice. Lawmakers responded by including a temporary tax provision in the American Jobs Creation Act of 2004 (Jobs Act) that specifically allowed motorsports facilities to use the seven-year rate.
The provision, which expired at the end of 2007, was included last October along with more than 35 other so-called extenders in H.R. 3996, a tax relief bill sponsored by House Ways and Means Committee Chair Charles B. Rangel, D-N.Y. The Joint Committee on Taxation estimated the extension of the seven-year recovery period could cost $ 27 million over 10 years. (For the revenue table, see Doc 2007-24353 or 2007 TNT 213-11.)
However, like the other extenders, the motorsports provision was stripped from the version of H.R. 3996 that eventually became law.
With an estimated 11 million attendees at racetrack events in 2006, the industry has again found vocal supporters from both sides of Capitol Hill who argue that the popular pastime has a significant economic impact on home districts and should be made permanent.
First Lap: Field Trips to Florida
Between July 2003 and February 2005, the International Speedway arranged for three congressional fact-finding trips to its facilities in Daytona Beach, Fla. The Florida-based company, which owns several motorsports facilities across the country, played host to a handful of aides from the staffs of several lawmakers, including former and current Ways and Means Committee members. According to House and Senate travel disclosure forms, the purpose of the trips was to discuss economic and tax issues facing the motorsports industry, including the depreciable life of racetracks.
An aide to then-Ways and Means member William J. Jefferson, D-La., attended a trip to Daytona Beach in July 2003. A February 2004 trip included staffers for Jefferson and then-taxwriters Mark Foley, Amo Houghton, and J.D. Hayworth and current House taxwriters Kevin Brady, R-Texas, Dave Camp, R-Mich., Ron Lewis, R-Ky., and Jerry Weller, R-Ill. A year later, aides to Foley, then-taxwriter E. Clay Shaw Jr., and current taxwriters Phil English, R-Pa., and Jim Ramstad, R-Minn., attended a similar trip.
For some of those members, the motorsports industry has a strong connection to home. A Camp spokesman told Tax Analysts in an e-mail that there are about a half-dozen motorsport facilities in the lawmaker's home district and more throughout Michigan.
"Given the prevalence of motorsports both within the district and across the state, the informational trip was beneficial in understanding how these facilities would have been impacted by the IRS's attempt to change their tax status," he added.
Camp would later go on to cosponsor a bill to make the motorsports provision permanent.
"The IRS should not be able to whimsically reclassify anyone's tax liability after two decades, which is what they tried to do with regard to motorsports facilities. Congress originally acted to provide clarity and certainty in the tax law," Camp's spokesperson said.
Former Senate taxwriter Rick Santorum introduced S. 1524, one of the first bills seeking to make the seven-year depreciation standard law, in July 2003. He was joined by Hayworth, who offered a companion bill (H.R. 2900). Cosponsors for both bills would later total 75 lawmakers. (For S. 1524, see Doc 2003-18405 or 2003 TNT 157-68. For H.R. 2900, see Doc 2003-17999 or 2003 TNT 152-35.)
"This longstanding treatment was widely applied and accepted, until now," Santorum said in a floor statement at the time. "Over the years, relying on this understanding of the tax law, facility owners and operators invested hundreds of million of dollars in building and upgrading these properties."
Santorum, naming six tracks in his state, argued that the motorsports industry was a viable force in local economies.
"As motorsports continue to grow as a national pastime, we must ensure that federal policy does not unnecessarily impede its contribution to the economy," he concluded.
With the passage of the Jobs Act in 2004, Congress approved a broad provision that applied to facilities placed in service before October 22, 2004, and before the provision's sunset at the end of last year. Tracks that raced cars, trucks, or motorcycles could apply the provision to improvements made in a wide range of property beyond racetracks including ticket booths, sidewalks, concession stands, and grandstands.
The next year lawmakers offered proposals to make the provision permanent. Santorum introduced S. 441 along with a similar proposal by Hayworth (H.R. 930) in February. (For S. 441, see Doc 2005-4415 or 2005 TNT 42-46. For H.R. 930, see Doc 2005-4488 or 2005 TNT 43-65.) Together both bills won 78 cosponsors.
Santorum, who said revenue constraints that required the provision to sunset at the end of 2007 could affect more than 900 tracks, called on Congress to make the provision permanent.
"These facilities contribute to the economy by attracting motorsports enthusiasts and tourists, hiring permanent and temporary employees, and making capital investments. Facilities of every type - - from local tracks that run weekly racing series to 'superspeedways' that host nationally televised events -- must continually upgrade and reinvest in order to remain competitive," he argued.
'Under-the-Radar' Industry
Lawmakers and industry officials argue that the motorsports industry has quickly become an economic force. A 2004 study commissioned by the Indy Partnership, a business group in Indianapolis, concluded the industry had "grown under the radar, with sporadic attention and few incentives from state and local governments."
The report looked at the motorsports industry in the Indianapolis region, home to the Indianapolis 500 and the U.S. Grand Prix. The study reported the region claimed 400 motorsports-related firms that employed almost 8,800 workers and paid $ 425 million in wages.
A separate 2005 study led by John E. Connaughton, an economics professor at the University of North Carolina's Belk College of Business, found a similar motorsports hub in North Carolina. Statewide the industry produced more than 27,000 direct and indirect jobs and paid almost $ 1.7 billion in compensation.
Supporters of the seven-year measure claim the provision is needed to help the industry remain competitive.
Tom Weisenbach, executive director of the Indiana Motorsports Association, argues that the state's motorsports racing has a sizable economic trickle-down effect. Indiana is home to about 54 facilities, and it is imperative that racetracks invest in the improvements to their facilities, he says.
"Anything that's going to help these tracks, we need to do," Weisenbach told Tax Analysts.
Loss of the provision could also affect the bottom lines of other, larger publicly traded motorsport companies like International Speedway, which saw $ 816.6 million in revenue in 2007.
That loss of the seven-year depreciation scale may "weigh a little bit" on International Speedway's overall growth, but in the long term it could have a bigger effect on decisions to invest in major upgrades to a facility or build new complexes, Joel Bloomer, an analyst with Morningstar, told Tax Analysts.
International Speedway is currently in the midst of an IRS audit reexamining how the company claimed its depreciation rate for a significant portion of its facilities for the years ended 1999-2005 according to the company's 2007 annual report.
The audit could "potentially result in the reclassification of approximately $ 101.1 million of income taxes from deferred to current."
Seeking the Checkered Flag
Now that the motorsports depreciation measure has expired, lawmakers are again trying to make it permanent.
In 2007, both Ways and Means member Mike Thompson, D-Calif., and Senate Finance Committee member Charles E. Schumer, D-N.Y., introduced bills (H.R. 1304 and S. 557) to make the provision permanent. (For H.R. 1304, see Doc 2007-12926 or 2007 TNT 104-25. For S. 557, see Doc 2007-8274 or 2007 TNT 64-29.)
In a statement accompanying the introduction of the bill, both lawmakers highlighted the economic importance of the industry. Thompson referenced five racetracks back in his home district, while Schumer highlighted more than 50 motorsport facilities in New York. The two bills total 109 cosponsors.
English, who is also a cosponsor of H.R. 1304 and previous measures, told Tax Analysts that the provision has clear economic value and that extending it would help racetracks plan their long-term capital investments.
"As Congress weighs the possibility of acting on an extenders package this year, this tax incentive, which has garnered strong, bipartisan support, has a good shot at being included," he said.
I clipped this from one of the many tax accounting news services that hits my e mail every few hours. Definitely not as exciting as T Ped's ride Sunday, but to some it may be an interesting read.
Bogged down by disagreements over whether to apply "pay as you go" budget rules to an alternative minimum tax patch, Congress ended 2007 without addressing the so-called extenders, a sizable package of temporary tax provisions that expired at the end of the year. More than 35 one-year extenders were added to H.R. 3996 at a cost of $ 21.14 billion over 10 years, according to the Joint Committee on Taxation; however, the extenders were stripped from the bill so a one-year AMT patch could be enacted. Congress is expected to take up an extenders package this year to address those expired provisions.
The list of extenders covers a wide range of issues, from tax incentives for charitable deductions to disaster relief to addressing the accelerated depreciation rate for restaurants. And while House Ways and Means Committee Chair Charles B. Rangel, D-N.Y., and ranking minority member Jim McCrery, R-La., have expressed interest in examining -- and possibly eliminating -- some of those provisions, one could argue history -- not to mention the lobbyists and constituents who fervently defend their chosen incentives -- is against them.
Tax Analysts is taking a closer look at some of those measures in an occasional series about the who, what, and how behind some of the less-talked-about provisions.
Each of them has a story.
*****
Racecar enthusiasts -- aka "NASCAR dads," a large sports fan base courted during the 2004 elections as an influential political constituency -- are the driving force behind a temporary tax provision that allows motorsports facilities to claim a seven-year depreciation rate schedule.
For almost 20 years, motorsports facilities claimed the seven-year depreciation rate under the "Theme and Amusement Parks" assets class, according to a paper from the Motorsports Coalition, an industry association. By 2003 the IRS had begun to take a closer look at that practice. Lawmakers responded by including a temporary tax provision in the American Jobs Creation Act of 2004 (Jobs Act) that specifically allowed motorsports facilities to use the seven-year rate.
The provision, which expired at the end of 2007, was included last October along with more than 35 other so-called extenders in H.R. 3996, a tax relief bill sponsored by House Ways and Means Committee Chair Charles B. Rangel, D-N.Y. The Joint Committee on Taxation estimated the extension of the seven-year recovery period could cost $ 27 million over 10 years. (For the revenue table, see Doc 2007-24353 or 2007 TNT 213-11.)
However, like the other extenders, the motorsports provision was stripped from the version of H.R. 3996 that eventually became law.
With an estimated 11 million attendees at racetrack events in 2006, the industry has again found vocal supporters from both sides of Capitol Hill who argue that the popular pastime has a significant economic impact on home districts and should be made permanent.
First Lap: Field Trips to Florida
Between July 2003 and February 2005, the International Speedway arranged for three congressional fact-finding trips to its facilities in Daytona Beach, Fla. The Florida-based company, which owns several motorsports facilities across the country, played host to a handful of aides from the staffs of several lawmakers, including former and current Ways and Means Committee members. According to House and Senate travel disclosure forms, the purpose of the trips was to discuss economic and tax issues facing the motorsports industry, including the depreciable life of racetracks.
An aide to then-Ways and Means member William J. Jefferson, D-La., attended a trip to Daytona Beach in July 2003. A February 2004 trip included staffers for Jefferson and then-taxwriters Mark Foley, Amo Houghton, and J.D. Hayworth and current House taxwriters Kevin Brady, R-Texas, Dave Camp, R-Mich., Ron Lewis, R-Ky., and Jerry Weller, R-Ill. A year later, aides to Foley, then-taxwriter E. Clay Shaw Jr., and current taxwriters Phil English, R-Pa., and Jim Ramstad, R-Minn., attended a similar trip.
For some of those members, the motorsports industry has a strong connection to home. A Camp spokesman told Tax Analysts in an e-mail that there are about a half-dozen motorsport facilities in the lawmaker's home district and more throughout Michigan.
"Given the prevalence of motorsports both within the district and across the state, the informational trip was beneficial in understanding how these facilities would have been impacted by the IRS's attempt to change their tax status," he added.
Camp would later go on to cosponsor a bill to make the motorsports provision permanent.
"The IRS should not be able to whimsically reclassify anyone's tax liability after two decades, which is what they tried to do with regard to motorsports facilities. Congress originally acted to provide clarity and certainty in the tax law," Camp's spokesperson said.
Former Senate taxwriter Rick Santorum introduced S. 1524, one of the first bills seeking to make the seven-year depreciation standard law, in July 2003. He was joined by Hayworth, who offered a companion bill (H.R. 2900). Cosponsors for both bills would later total 75 lawmakers. (For S. 1524, see Doc 2003-18405 or 2003 TNT 157-68. For H.R. 2900, see Doc 2003-17999 or 2003 TNT 152-35.)
"This longstanding treatment was widely applied and accepted, until now," Santorum said in a floor statement at the time. "Over the years, relying on this understanding of the tax law, facility owners and operators invested hundreds of million of dollars in building and upgrading these properties."
Santorum, naming six tracks in his state, argued that the motorsports industry was a viable force in local economies.
"As motorsports continue to grow as a national pastime, we must ensure that federal policy does not unnecessarily impede its contribution to the economy," he concluded.
With the passage of the Jobs Act in 2004, Congress approved a broad provision that applied to facilities placed in service before October 22, 2004, and before the provision's sunset at the end of last year. Tracks that raced cars, trucks, or motorcycles could apply the provision to improvements made in a wide range of property beyond racetracks including ticket booths, sidewalks, concession stands, and grandstands.
The next year lawmakers offered proposals to make the provision permanent. Santorum introduced S. 441 along with a similar proposal by Hayworth (H.R. 930) in February. (For S. 441, see Doc 2005-4415 or 2005 TNT 42-46. For H.R. 930, see Doc 2005-4488 or 2005 TNT 43-65.) Together both bills won 78 cosponsors.
Santorum, who said revenue constraints that required the provision to sunset at the end of 2007 could affect more than 900 tracks, called on Congress to make the provision permanent.
"These facilities contribute to the economy by attracting motorsports enthusiasts and tourists, hiring permanent and temporary employees, and making capital investments. Facilities of every type - - from local tracks that run weekly racing series to 'superspeedways' that host nationally televised events -- must continually upgrade and reinvest in order to remain competitive," he argued.
'Under-the-Radar' Industry
Lawmakers and industry officials argue that the motorsports industry has quickly become an economic force. A 2004 study commissioned by the Indy Partnership, a business group in Indianapolis, concluded the industry had "grown under the radar, with sporadic attention and few incentives from state and local governments."
The report looked at the motorsports industry in the Indianapolis region, home to the Indianapolis 500 and the U.S. Grand Prix. The study reported the region claimed 400 motorsports-related firms that employed almost 8,800 workers and paid $ 425 million in wages.
A separate 2005 study led by John E. Connaughton, an economics professor at the University of North Carolina's Belk College of Business, found a similar motorsports hub in North Carolina. Statewide the industry produced more than 27,000 direct and indirect jobs and paid almost $ 1.7 billion in compensation.
Supporters of the seven-year measure claim the provision is needed to help the industry remain competitive.
Tom Weisenbach, executive director of the Indiana Motorsports Association, argues that the state's motorsports racing has a sizable economic trickle-down effect. Indiana is home to about 54 facilities, and it is imperative that racetracks invest in the improvements to their facilities, he says.
"Anything that's going to help these tracks, we need to do," Weisenbach told Tax Analysts.
Loss of the provision could also affect the bottom lines of other, larger publicly traded motorsport companies like International Speedway, which saw $ 816.6 million in revenue in 2007.
That loss of the seven-year depreciation scale may "weigh a little bit" on International Speedway's overall growth, but in the long term it could have a bigger effect on decisions to invest in major upgrades to a facility or build new complexes, Joel Bloomer, an analyst with Morningstar, told Tax Analysts.
International Speedway is currently in the midst of an IRS audit reexamining how the company claimed its depreciation rate for a significant portion of its facilities for the years ended 1999-2005 according to the company's 2007 annual report.
The audit could "potentially result in the reclassification of approximately $ 101.1 million of income taxes from deferred to current."
Seeking the Checkered Flag
Now that the motorsports depreciation measure has expired, lawmakers are again trying to make it permanent.
In 2007, both Ways and Means member Mike Thompson, D-Calif., and Senate Finance Committee member Charles E. Schumer, D-N.Y., introduced bills (H.R. 1304 and S. 557) to make the provision permanent. (For H.R. 1304, see Doc 2007-12926 or 2007 TNT 104-25. For S. 557, see Doc 2007-8274 or 2007 TNT 64-29.)
In a statement accompanying the introduction of the bill, both lawmakers highlighted the economic importance of the industry. Thompson referenced five racetracks back in his home district, while Schumer highlighted more than 50 motorsport facilities in New York. The two bills total 109 cosponsors.
English, who is also a cosponsor of H.R. 1304 and previous measures, told Tax Analysts that the provision has clear economic value and that extending it would help racetracks plan their long-term capital investments.
"As Congress weighs the possibility of acting on an extenders package this year, this tax incentive, which has garnered strong, bipartisan support, has a good shot at being included," he said.
