Tax

Article Danielle Camara

The equine industry has long balanced tradition with innovation. Today, that balance is beginning to shift as data and artificial intelligence (AI) make their way into how horses are bred, trained, monitored, and managed. While still early in adoption across much of the industry, these technologies are starting to complement experience and instinct with real-time insights, predictive analytics, and smarter decision‑making. For breeders, trainers, veterinarians, and farm operators alike, Data and AI are not yet standard practice—but they are quickly gaining traction as valuable tools with the potential to reshape the industry.  

Smarter Equine Health and Performance Monitoring 

One of the most promising areas for Data and AI in the equine industry is health and performance tracking. While not yet widely implemented across all operations, advances in wearable technology and analytics are making continuous monitoring more accessible. Patterns that once took months to observe—or were missed entirely—can now be flagged in real time. 

  • Early injury detection: AI can help identify subtle deviations in gait, stride length, or load distribution before they become clinical injuries. 
  • Performance optimization: Training programs can be personalized based on how each horse responds to specific workloads. 
  • More informed decisions: Data serves as a complimentary tool alongside trainer and veterinary expertise—not a replacement. 

Example 1: 
A racing stable uses daily gait‑analysis data from wearable sensors. An algorithm flags a slight asymmetry developing over several days, prompting a preventative veterinary exam that avoids a more serious tendon injury. 

Example 2: 
A sport horse facility tracks heart rate recovery and training intensity across disciplines. AI models identify which conditioning routines lead to peak performance without excessive strain, allowing trainers to fine‑tune programs by horse rather than by stable standard. 

Data‑Driven Breeding and Bloodstock Decisions 

Breeding decisions have traditionally relied on pedigree analysis, historical success, and expert judgment. Data and AI are beginning to expand this foundation by offering an additional layer of analysis—though adoption is still evolving. By analyzing bloodlines, performance traits, injury histories, and environmental factors, these tools can help support more informed decision-making. 

  • Predictive breeding insights: Machine learning models can estimate the probability of desirable traits appearing in offspring. 
  • Reduced investment risk: Data can help bring additional clarity to high‑value breeding decisions. 
  • Continuous improvement: Models improve over time as new performance data becomes available. 

Example 1: 
A breeding operation evaluates stallion options using an AI model that incorporates pedigree compatibility, historical foal performance, and career longevity—helping prioritize crosses with higher projected success. 

Example 2: 
A sales operation uses data analytics to identify undervalued bloodstock by comparing sale prices against predicted performance outcomes, improving ROI in competitive auctions. 

Operational Efficiency Across Farms and Facilities 

Beyond horse performance and breeding, Data and AI are starting to influence the business operations that support equine enterprises. While still an emerging capability for many organizations, integrated analytics platforms can connect financial data, barn management systems, and sensor data into a single operational view. 

This creates opportunities to move from reactive decision‑making toward more proactive planning. 

  • Optimized feeding and care plans: Aligning nutrition and health protocols with workload and metabolic needs. 
  • Resource and staffing optimization: Using historical data to better anticipate staffing and facility usage. 
  • Improved financial visibility: Gaining clearer insight into cost drivers and operational performance.  

Example 1: 
A boarding and training facility analyzes historical stall usage, turnout patterns, and staffing levels to optimize schedules during peak seasons—reducing overtime costs while improving horse care consistency. 

Example 2: 
A multi‑location breeding farm uses centralized analytics to compare feed costs, veterinary expenses, and outcomes across locations, identifying best practices that can be scaled enterprise‑wide. 

Looking Ahead: Competitive Advantage Through Intelligence 

As Data and AI tools continue to evolve, their role in the equine industry is expected to expand. While adoption is not yet widespread, organizations that begin exploring these tools may be better positioned to enhance horse welfare, improve performance outcomes, and operate more efficiently over time. The future of the equine industry is not about replacing expertise—it’s about enhancing it. When thoughtfully applied, data and analytics can support the knowledge and intuition that have long defined the industry.   

Whether you manage a farm, train elite athletes, or support operations behind the scenes, now is a good time to begin exploring how Data and AI could fit into your operation. Even small steps can lead to meaningful insights over time. 

If you are interested in learning more or have specific questions, the Data & AI team at Dean Dorton is here to help guide the conversation.  

Article Autumn Hines

If you own horses or run a farm, tax season can feel like a mad dash to the finish line. The good news: a few “big picture” rules drive most of the tax outcomes we see in equine and farm operations. This post highlights the items that tend to matter most: business vs. hobby status, whether losses are limited under the passive activity rules, how bonus depreciation can help (or hurt) your taxable income, and what to watch for when you sell a horse.

1) Business vs. Hobby: The Question That Drives Everything

One of the first things the IRS looks at is whether your horse or farm activity is a real “for‑profit” business or a hobby. This matters because hobby expenses generally aren’t deductible under current law. In other words, you may still have to report income from the activity, but you may not get the tax benefit of the related costs (including depreciation). For many owners, getting this classification right is the biggest tax issue of the year.

The IRS often uses nine factors to decide whether you have a profit motive. The theme is straightforward: Do you run the activity like a business? Helpful signals include quality books and records, separate bank accounts, working with quality advisors, and making changes when results aren’t trending toward profitability. Keeping notes on the business decisions you make—why you bought or sold a horse, changed trainers, adjusted breeding plans, purchased additional farmland, etc.—can be surprisingly valuable if questions come up later.

You may have heard about the “2‑out‑of‑7” rule for horse activities. Earning a profit in two of seven years can help shift the burden of proof, but it isn’t a free pass—and documentation still matters. If losses are expected (which is common early on), it’s worth checking in with your tax advisor about how you’re tracking income and expenses and whether your records tell a clear “business” story.

2) Passive Loss Rules: When Losses Don’t Offset Other Income

Even when an activity is a business, losses don’t always reduce your other income (like W‑2 wages or portfolio income). The passive activity rules can limit deductions unless you “materially participate.” One common way to qualify is participating in more than 500 hours during the year, but there are other tests, too.

This comes up a lot when owners rely on trainers, farm managers, or employees. The IRS generally wants proof of what you did and when you did it, so a simple time log and a file of key emails/texts (vet decisions, training changes, purchase/sale approvals) can go a long way. If losses are being suspended year after year, it may be time to revisit documentation, involvement, and how the activity is structured.

3) Bonus Depreciation: A Helpful Lever for Big Purchases

If you bought horses, equipment, or made major improvements, bonus depreciation may be a big deal on your return. Recent law changes made 100% bonus depreciation available again for certain qualifying property acquired and placed in service after January 19, 2025. In plain terms, that can allow you to deduct the full cost in the year the asset is ready to be used—rather than spreading the deduction out over several years.

The key phrase is “placed in service,” which generally means the asset is ready and available for its intended use. A racehorse is often placed in service when it starts training or racing; breeding stock when it’s available for breeding. For equipment, barns, fencing, and certain land improvements, it’s when the property is ready for use—not necessarily when you signed the contract or wrote the check. Because large deductions can also affect estimated taxes and other items on your return, timing is worth planning instead of leaving to chance.

4) Selling a Horse: Same Sale Price, Very Different Tax Results

When you sell a horse, the tax answer starts with a simple question: why did you own the horse? If you bought the horse mainly to resell (for example, pinhooking), the horse is typically treated like inventory, and the profit is generally taxed as ordinary income. If the horse was used in your business operations – such as breeding stock or a racehorse – part of the gain may qualify for long-term capital gain treatment if the horse was owned for over 24 months. One more wrinkle: depreciation you claimed on the horse may be “recaptured” if the horse is sold for a gain and taxed at ordinary income rates. That’s why two sales that look similar economically can produce very different tax bills.

How you structure the sale can matter, too. An installment sale (getting paid over time) may let you recognize gain over multiple years, which can help with cash flow and tax planning. However, installment reporting generally doesn’t apply to inventory, and depreciation recapture is usually taxed right away—even if you haven’t collected all the payments yet. Understanding the tax impact can help with cash flow planning in these sale transactions.

Not every “taxable event” is a planned sale. If a horse dies, insurance proceeds can sometimes be higher than your tax basis—creating taxable gain. In many cases, that gain can be deferred if you reinvest the proceeds into a qualifying replacement horse (or horses) within the required time frame and follow the applicable rules. Because the deadlines can come up quickly, it helps you to know this option exists before you need it.

Horse and farm taxes can get technical fast, but most issues come back to a few basics:

  • Documenting business intent
  • Tracking participation
  • Planning the timing of big purchases
  • Thinking through the tax angle before a sale closes

If you’re unsure how your activity is being classified—or you had a major purchase, sale, or insurance event—consider a quick check‑in with your tax advisor before filing. A short planning conversation now can prevent expensive clean‑up later.

Article Dean Dorton Admin

As the 2026 filing season approaches, construction companies nationwide face a tax landscape that is both generous in deductions and more complex. Expanded depreciation rules, new accounting flexibility and long-term certainty for pass-through incentives mean smart planning now can improve cash flow and significantly reduce taxable income.   

Here are the top three tax strategies construction business owners should prioritize this filing season. 

1. Maximize Depreciation and Equipment Expensing 

Construction is a capital-intensive business, and the federal tax code increasingly reflects that reality.  

Why It Matters 

The One Big Beautiful Bill Act (OBBBA) permanently reinstated 100% bonus depreciation for qualifying assets placed in service after January 19, 2025. This allows companies to fully expense heavy equipment, vehicles, tools, and more in the year they’re put into use — instead of over many years. 

At the same time, the Section 179 deduction cap has been increased (e.g., up to $2.5 million, with thresholds beginning to phase out at $4 million in 2025 and indexed for inflation in 2026). This expanded threshold gives many construction firms greater flexibility to expense qualifying purchases immediately.  

Practical Tips 

  • Time purchases carefully: Only assets placed in service by year-end qualify for immediate expensing. Plan deliveries, install schedules, and ready-for-use timing accordingly.  
  • Layer Section 179 and bonus depreciation: Use Section 179 to target specific high-priority assets, then apply bonus depreciation to remaining purchases. This approach is especially effective for large trucks, cranes and heavy machinery.  
  • Don’t overlook technology: Certain software, project management tools and digital platforms may qualify for expensing when properly classified. These deductions not only cut your taxable income but also improve cash flow — money you can reinvest into wages, materials, or expansion. 

2. Leverage Specialized Credits and Accounting Flexibility 

Beyond basic depreciation, construction companies can tap into several targeted tax incentives and accounting elections that reduce liability. 

Key Opportunities 

  • Qualified Business Income (QBI) Deduction: Pass-through companies (LLCs, S corps, partnerships) can deduct up to 20% of qualified business income — and this deduction is now made permanent.  
  • Research & Development Credits: Yes, even construction firms can qualify if they innovate — for example, by developing more efficient building processes, materials, or safety systems. These credits directly reduce tax liability dollar-for-dollar.  
  • Energy-Efficient Building Incentives: Deductions like IRC §179D reward energy-efficient design and sustainable upgrades — but many of these incentives are tightening or set to sunset mid-2026, so acting now is crucial.  
  • Revenue Recognition Choices: Construction accounting methods — such as the completed-contract method versus the percentage-of-completion method — can materially affect when income is recognized and taxes owed. Recent law changes give broader flexibility, especially for residential and multi-unit projects. 

Actionable Steps 

  • Work with a CPA who understands construction: Many tax credits and methods require specific documentation and elections. A specialist helps ensure you capture all eligible benefits.  
  • Evaluate contracts annually: Large projects spanning multiple years can benefit from strategic method elections that defer income or accelerate deductions.  
  • Year-Round Planning: Estimated Taxes and Timing of Income 

3. Being proactive about taxes throughout the year — not just at filing time — can yield major advantages. 

Why It’s Critical 

Construction revenue and expenses often don’t align neatly with calendar years. Seasonal revenues, retainage, project delays, and subcontractor timing can create peaks and valleys that complicate quarterly estimations. Improving how and when you recognize income or deductions can significantly reduce year-end surprises and penalties.  

Strategies That Work 

  • Optimize Estimated Tax Payments: Avoid underpayment penalties and preserve cash flow by forecasting profits mid-year and aligning estimated payments with expected liabilities.  
  • Accelerate or Defer Income/Expenses: If you use cash accounting, deferring invoices until January can delay tax liability, while accelerating deductible expenses into the current year can increase deductions. Always balance with cash flow needs.  
  • Maintain pristine documentation: Timely and detailed bookkeeping — especially job cost tracking — not only simplifies tax preparation but supports every deduction and credit you claim.  

Final Thoughts 

The 2026 filing season isn’t just a deadline — it’s an opportunity. With permanent enhancements to depreciation, expanded deduction thresholds, and renewed incentives like the QBI deduction, construction companies have unprecedented tools to shape their tax outcomes. But these opportunities work best when paired with planning, expert advice and rigorous documentation. 

Start conversations with your tax advisor now — not in March — so your 2025 books are positioned to deliver the best possible results when you file in 2026.  

Contact your Dean Dorton advisor to discuss how these strategies may apply to your construction business and to begin proactive tax planning for the 2026 filing season.

Article Danielle Camara

To increase efficiency, reduce costs, and prevent fraud, the U.S. Department of the Treasury and the Internal Revenue Service (IRS) are moving towards fully electronic payments to and from the IRS. This includes both tax payments and refunds issued to taxpayers.

On March 25, 2025, President Trump signed Executive Order 14247, titled Modernizing Payments to and from America’s Bank Account. In response, the IRS issued new Frequently Asked Questions, explaining how the changes affect taxpayers, particularly during the 2025 filing season. Key takeaways are summarized below in a Q&A format.

Individual Tax Refunds

What’s changing with how refunds are paid?

As of September 30, 2025, the IRS generally has stopped issuing paper refund checks to individuals. Direct deposit will be the primary method for issuing refunds. In limited circumstances, certified payments or paper checks may still be issued if no electronic option is available.

Will the transition delay my refund?

Generally, no. Most taxpayers will receive refunds faster through electronic payments methods.

What happens if I don’t include direct deposit information on my return?

Taxpayers should provide direct deposit information when filing a tax return. If banking information is missing or invalid, the IRS still will process the return and send a CP53E notice by mail to the taxpayer’s last known address on record requesting updated information.

The CP53E notice will instruct taxpayers to visit IRS.gov/your-account to create an account and update their banking information or explain why it cannot be provided.

Once the taxpayer responds, the refund will be issued by direct deposit or paper check, as applicable. If the taxpayer does not respond to the CP53E notice within 30 days, the refund will be released as a paper check after six weeks.

Please note that the IRS will only contact taxpayers by U.S. mail, not by phone or text.

Will the IRS continue to issue paper refund checks to deceased accounts?

Yes. There are no changes to how refunds are issued to deceased individuals.

Payments to the IRS

Can I continue to pay the IRS by check or money order?

Yes, for now. The IRS will continue accepting checks and money orders but plans to transition fully to electronic payments. Over time, paper payments will generally be limited to cases involving hardship or legal requirements.

Do I need special technology to make electronic payments?

Generally, taxpayers only need internet access and a bank account or credit or debit card to pay electronically. The FAQs provide links to various electronic payment options for taxpayers. Visit the Payment Options page on the IRS’s website for more information.

How do I know that my payment was received?

Taxpayers who pay electronically will receive an immediate confirmation number and receipt or a confirmation email that can be saved or printed for their records.

Businesses

Will businesses continue to receive refunds by paper check?

The IRS is working to add the direct deposit option to most business tax return types. Paper check refunds for businesses will be phased out over time.

How can businesses make payments to the IRS?

Review the FAQs or visit the Payment Options page on the IRS’s website for information on payment options for businesses.

Miscellaneous

How will these changes affect international taxpayers?

For now, international taxpayers should continue to use existing options to file returns, make payments, and receive refunds. Wire transfers remain available, and the IRS is working to develop secure alternatives for international taxpayers.

Will these changes affect how I file my tax return?

No. No changes are being made to the way that tax returns are filed. Taxpayers will continue to file their tax returns as usual.

For questions on the IRS’s new electronic payment requirements, please contact Dean Dorton.

Article Autumn Hines

Holiday shopping scams surge this time of year, especially those tied to package deliveries and “too good to be true” deals.

One increasingly common tactic is brushing. In these schemes, a threat actor sends an unsolicited package containing a random item along with a QR code. Scanning the code may lead to malware installation or prompt you to enter personal or account credentials.

Other common delivery-related scams include fake text messages claiming a package could not be delivered by USPS, UPS, or FedEx. These messages often contain malicious links designed to steal personal information.

How to protect yourself:

  • Never scan QR codes from unknown or unexpected sources
  • Avoid clicking delivery links in unsolicited texts or emails
  • Verify deliveries directly through official carrier websites or apps
  • Be skeptical of unusually large holiday discounts
  • Always check website URLs for misspellings or subtle typos, a common sign of fraudulent sites
  • Never enter login credentials on unfamiliar or untrusted websites

If something feels off, trust your instincts because it likely is.

Phishing & Impersonation Attempts

Phishing scams remain one of the most effective tools for cybercriminals, and they tend to spike during the holiday season. Common examples include emails claiming you’ve received a holiday bonus, payroll update, or e-gift card.

These messages may appear legitimate, but often originate from suspicious or slightly altered email domains.

Red flags to watch for:

  • Unexpected emails involving money, gifts, or urgent requests
  • Messages from unfamiliar or oddly formatted email addresses
  • Pressure to act quickly or click a link

When in doubt, don’t click. Verify requests through a trusted channel or contact the sender directly using known contact information.

Travel scams are especially common during peak holiday travel periods. Scammers may claim your flight has been canceled or require you to call a number immediately to confirm details.

Public Wi-Fi also poses risks. Cybercriminals can set up fake access points that look legitimate and trick travelers into connecting.

Best practices while traveling:

  • Only contact airlines through official apps or verified phone numbers
  • Avoid public Wi-Fi when possible; use mobile data or a personal hotspot
  • Connect only to official, trusted networks if Wi-Fi is necessary
  • Never use charging cables or USB ports at public kiosks, such as airports (a tactic known as “juice jacking”)

Account Takeovers & MFA Fatigue Attacks

Another growing threat is MFA fatigue, where attackers repeatedly send multi-factor authentication requests, hoping you’ll approve one out of frustration.

If you receive MFA prompts you didn’t initiate, do not approve them.

What to do instead:

  • Deny all unsolicited MFA requests
  • Immediately change your password
  • Use a password manager to generate and store strong, unique passwords
  • Avoid reusing passwords across accounts to prevent credential-stuffing attacks

Stay Cyber Aware This Holiday Season

The holidays are stressful enough without the added risk of cybercrime. By staying alert and following proactive cybersecurity best practices, you can significantly reduce your risk.

Trust your instincts, slow down before clicking or responding, and remember: legitimate organizations won’t pressure you into urgent action or request sensitive information unexpectedly.

Stay cyber aware, and enjoy a safer, more secure holiday season.

Article Autumn Hines

As Year-end approaches, horse and farm owners should evaluate how the One Big Beautiful Bill Act (OBBBA) affects both 2025 and years to come. Understanding these tax changes now can help you make informed decisions before December 31.

Understand the Impact of 100% Bonus Depreciation

OBBBA permanently extended 100% bonus depreciation for assets purchased and placed in service after January 19, 2025. For 2025:

  • Confirm the correct bonus depreciation percentage: either the enhanced 100% or the applicable percentage for assets purchased before January 20, 2025.
  • Keep in mind, many states do not follow this increased 100% bonus depreciation, so it is important to check your state’s rules to see if you receive a state tax benefit in addition to the Federal tax benefit.

Increasing Current Deductions

If your goal is to accelerate deductions this year, consider purchasing and placing in service (meaning the asset is ready for its intended use) qualifying assets by December 31, 2025.

Eligible assets, which must be used predominantly in the United States, include:

  • Equipment
  • Fencing
  • Land improvements
  • Barns
  • Most horse purchases (with some exceptions)

In addition to favorable depreciation rules, many horse and farm owners qualify to use the cash method of accounting when filing annual tax returns. If you use the cash method, consider prepaying expenses before year-end. However, ensure there is a valid non-tax reason for doing so, such as bulk or early payment discounts on feed, supplies, advertising, or access to a particular stallion.

This guidance assumes that you conduct your horse operations as a business and that you are either an active participant under material participation rules (details beyond the scope of this discussion) or have sufficient passive activity income to offset potential losses.

Charitable Giving Considerations Before 2026 Changes

For charitably inclined individuals, OBBBA permanently increased the adjusted gross income (AGI) limitation for cash gifts to public charities from 50% to 60%. However, new restrictions begin in 2026:

  • Donations below 0.5% of AGI will no longer be deductible for those who itemize.
  • Overall itemized deductions, including charitable contributions, will be reduced by a formula equal to 2/37 of the lesser of itemized deductions or income exceeding the 37% tax bracket. For example, a married couple with $1,000,000 of 2026 taxable income and $100,000 of itemized deductions would lose roughly $5,400 of their deductions due to this limit.  

So, when should you give?

  • If you itemize and plan to make charitable donations, 2025 may be a more favorable year to give, or even accelerate multi-year contributions, since these new limitations do not apply until 2026.
  • If you do not itemize, 2026 may be better, as OBBBA created a permanent $1,000 charitable deduction for taxpayers taking the standard deduction.

Expanded SALT Deduction Limits (2025-2029)

OBBBA also temporarily increased the itemized deduction limit for state, local, and real estate taxes from $10,000 to $40,000 for tax years 2025 through 2029. This higher limit phases down for incomes between $500,000 and $600,000, but does not reduce the state and local tax deduction below $10,000. If you operate a business, note that many states have adopted pass-through entity taxes, which can reduce ordinary business income and avoid the state tax cap, often resulting in significant federal tax savings.

Gifting and Estate Planning Strategies

Beyond income tax planning, consider estate planning strategies. One effective approach is lifetime gifting. Key basics:

  • 2025 annual gifts of $19,000 per recipient may be made to U.S. citizens free of gift and generation-skipping transfer (GST) tax.
  • The 2025 lifetime gift and GST exclusion is $13.99 million per person, permanently increased under OBBBA and indexed annually for inflation.

If the lifetime threshold is exceeded, gifts are taxed at 40%, and GST applies at an additional 40% for transfers to individuals more than 37.5 years younger than the donor (e.g., gifts to grandchildren).

Which Assets Make the Best Gifts?

Ideal assets for gifting are those expected to appreciate. In other words, beyond income tax planning, consider long-term estate planning opportunities.

Example: Gifting property worth $100,000 today that grows to $500,000 at death removes $500,000 from your estate while using only $100,000 of your exemption. Conversely, if the asset depreciates, you may waste exemption value.

Equine assets can be part of a gifting plan, though their future value is uncertain. If including horses, consider stallion shares from a profitable stallion (which generates cash flow) or broodmare interests rather than younger racing prospects. Remember, the recipient assumes responsibility for care and related expenses. Farms, typically held long-term, may offer better appreciation potential.

Using Pass-Through Entities to Maximize Gifting

To maximize gifting benefits, parents or grandparents often contribute assets to a pass-through entity (holding company). Non-controlling interests in the entity can then be gifted or sold at a discount to children or grandchildren (or their trusts), while the original owner retains voting control.

As the saying goes, nothing is certain except death and taxes. The first is unavoidable, but you can manage exposure to the second through effective planning, some of which is outlined above. If you have any questions, please do not hesitate to reach out to your Dean Dorton advisor.

Happy Holidays and best wishes for a successful year-end tax planning!