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KENTUCKY SALES & USE TAX
The Kentucky Quarter Horse Association recommends you contact professional tax or legal advisors if you have specific questions.
General Guidance
KRS 139.531 provides the basis for the application of tax to "fees for breeding a stallion to a mare in this state". KRS 139.050 provides definitions of gross receipts for sales tax purposes.
1) The fees paid for breeding a stallion to a mare that occurs in Kentucky are subject to the 6% sales tax. A breeding that occurs out of state is not subject to the Kentucky sales tax. If a seller contracts to sell semen for use in the artificial insemination of a mare located in Kentucky, then the Kentucky sales tax applies. If a mare owner takes possession of semen in Kentucky for artificial insemination, then Kentucky sales tax applies.
2) If a stallion owner donates a season or stud fee to a charity for auction, the auctioneer or charity that receives receipts from the sale of the breeding season is subject to the Kentucky sales tax. Included in the amount subject to sales tax are any services that are part of the sale, such as chute fees which are related to the collection of the stallion.
3) The stallion owner that receives receipts from the breeding of a stallion to a mare in this state is responsible for the tax. A stallion manager may remit the sales tax due on behalf of the stallion owners per agreement. However, if additional tax is determined to be due from a breeding transaction, the stallion owner is the responsible party.
4) If a stallion owner breeds his own mare to his stallion, there are no receipts paid and no taxable transaction occurs.
