Do out of state breeders pay sales tax on stud fees in KY?

[karenkarenn]

I wonder about shipped semen???I know this is not a TB thing but if I buy semen in Kentucky to be shipped out or let's pretend a frozen embryo?How is it considered???

Now why would you bring that up in a Thoroughbred racing forum? Why not contact a Qh or Warmblood Forum and ask them? Go and contact Overbrook farm and see if they still have Storm Cat frozen semen for Qh's. They have been doing that for a while now.

[Heidilady]

I wonder about shipped semen???I know this is not a TB thing but if I buy semen in Kentucky to be shipped out or let's pretend a frozen embryo?How is it considered???

Now why would you bring that up in a Thoroughbred racing forum? Why not contact a Qh or Warmblood Forum and ask them? Go and contact Overbrook farm and see if they still have Storm Cat frozen semen for Qh's. They have been doing that for a while now.

Geez, bite Sylvie's head off. Many people here have other horse related expertise which could be used to answer her question, and lest you forget, you're in the General Discussion subforum. Racing is in another section and besides, this is TB related even if Sylvie didn't realize it at the time. By your own admission there are stallions like Storm Cat used for mating with QH mares via frozen semen. Why should she have to go to a QH or Warmblood forum when someone here might be selling frozen semen from their TB stallion or know something about the tax implications? The question was also on topic for the thread in the sense that it involves breeding and what gets taxed. Go right ahead and ask your question, Sylvie.

[madelyn]

Reading this, semen from stallions domiciled in KY should be taxable. I found this table regarding equine sales tax in KY:

Mares
Generally subject? Yes. KRS § 139.531(1)(b).
Exceptions The sale of a horse for breeding purposes is exempt. KRS § 139.531(2)(a).

Stallions
Generally subject? Yes. KRS § 139.531(1)(b).
Exceptions The sale of a horse for breeding purposes is exempt. KRS § 139.531(2)(a).

Stallion Shares The sale of shares of a horse for breeding purposes is exempt. KRS § 139.531(2)(a).

Stud Fees
Generally subject? Sales taxes apply to “fees paid for breeding a stallion to a mare in this state.” KRS § 139.531(1)(a).

Lifetime Breeding Rights
Generally subject? Yes. See Calumet Farm, Inc. v. Revenue Cabinet, 793 S.W.2d 830 (Ky. Ct. App. 1990)

Racehorses/Showhorses
Generally subject? Yes. FAC r. 12A-1.049(4).
Exceptions The sale of horses less than two years of age to a non-resident/non-commercial domicile of Kentucky is exempt. KRS § 139.531(2)(d)

Claiming
Generally subject? Yes. Tax applies to “the sales price of any horse claimed at any race meeting within this state.” KRS 139.531(1)(c).

Other
Shipping out of state Nonresident/non-commercially domiciled purchaser must generally take possession outside state to be exempt. KRS 139.200(1)(a).

Re-sales Purchases of horses for resale are exempt, so long as the horses are not used in racing or showing before resale. KRS § 139.270; 139.290.

Occasional sales Exempt where seller has less than two retail sales during any 12-month period. KRS 139.010(15).

Sales directly by the breeder No exemptions noted.
Sales at auction No exemptions noted.

Leasing Taxed as a sale. KRS 139.010(6)(a).
Sales Tax — 6% State Rate

[wgc517]

Madelyn,

That was good information. But as I read the Stud fee example I focus on the words "mare in this state". Can that be interpreted in different ways? A mare kept in KY vs a mare shipped in? Or am I just over reading it?

Stud Fees
Generally subject? Sales taxes apply to “fees paid for breeding a stallion to a mare in this state.” KRS § 139.531(1)(a).

[Sylvie Hebert]

Thank you for the info Madelyn and Karenkaren get a life...you follow me from one suject to the next and attack everything I say or do.

[Jeff]

Sylvie,

For those of us who breed quarter and thoroughbred mares to thoroughbred stallioms it's a very pertinent question. Thank you for asking. I'm just assuming that buying shipped semen for my quarter msre would be
taxable, would be nice to know for sure though.

Jeff

[madelyn]

Madelyn,

That was good information. But as I read the Stud fee example I focus on the words "mare in this state". Can that be interpreted in different ways? A mare kept in KY vs a mare shipped in?

No. The mare, if she is shipped into KY for a live cover, is physically in the state at the time she is bred.

[aurora]

OK, here is another scenario. A stallion service is donated to a charitable organization outside of KY (let's use Iowa for example). The charitable organization sells the stallion service at auction. The stallion stands in KY where the mare is serviced. How is this legallly a SALES tax that the charitable organization collects since the stallion service was donated to them?

[madelyn]

They are still selling the stallion service, which is still being provided in KY, and it is still subject to KY tax (I have bought a number of seasons that way and paid the tax). They are not a reseller.