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Everybody is happy with Gun Bow now, including Mrs. Graham, who last week cheerfully and graciously bought a one-tenth share in the syndicate for $100,000. Especially happy is Trainer Neloy. "This horse has all the potential in the world," says Neloy. "He's an eye-catcher to look at, about 16 hands tall, and I'd say about 1,080 pounds. He girths exceptionally big, which is where he gets his tremendous lung power. He was bruised in midseason, and we were forced to let up on him. But the Whitney was his best race. Carrying 130 pounds, he outsprinted the sprinters and still had enough left to beat Mongo."
The deal for $1 million which followed Gun Bow's latest victory (he has now won $371,120 for the Gedney Farm co-owners) makes sense not only to Mrs. Stanley and Harry Albert, who keep four of the 10 shares, but to each of the six new one-tenth owners—John Gaines, Warner Jones, Elizabeth Arden Graham, C. V. Whitney, Mrs. John Thouron and a partnership of Leslie Combs II and John W. Hanes.
The key to the ownership of valuable horseflesh is the method and rate at which the purchaser can depreciate it. Normally racehorses can be depreciated over five years, or from the age of 2, when they are eligible to earn money, through their 6-year-old year. If, as a new owner, you follow this tax depreciation schedule, you write off 20% of your purchase price for each of those productive years. When you depreciate a horse bought for stud purposes only, you have to spread your depreciation out until your stallion is 16 years old, or, in the case of broodmares, until they become 14.
When you purchase a racehorse at 4, as Gun Bow is, you would be allowed to fully depreciate him as a racehorse in three years, i.e., at the rate of 33?%. Because Gun Bow will only be racing for the syndicate for one-third of this season, the new owners can only take one-third of that 33?% now, but they get the full 33?% for 1965. Then, since it is the intention of Syndicate Manager Gaines to quit racing Gun Bow at the end of his fifth year and stand him alongside Crozier at Gainesway Farm in 1966, stud rates will apply in the write-off for the next 11 years.
As precise and clear-cut as this formula may seem, the figures and circumstances on any major purchase are seldom parallel, and the U.S. never ceases to take an interest in each transaction. The most celebrated example is that of the Nashua sale. The Nashua syndicate rightly contended it had bought Nashua for racing purposes as well as for breeding purposes. The tax people took the position that the famous horse had been bought primarily for breeding, and that therefore the syndicate should not be eligible for the more advantageous depreciation rates which apply to horses still racing. The syndicate proved its point when Nashua won over $300,000 in purses as a 4-year-old.
If Nashua had earned little or nothing that season, the Government might have claimed that the syndicate was racing him solely for quick depreciation purposes. Nashua got his owners off the hook with one final winning year, and now Gun Bow will have a year and four months in which to do the same.
"If Gun Bow is half as good as Kelso for half as long we'll all be happy," said John Gaines to Kelso's trainer last week. Carl Hanford, who now knows a great horse from a good one, replied thoughtfully, "I really believe Gun Bow will be a great horse."