facilities from transmitting betting in- formation; and (5) provide for a $10,000 fine or imprisonment for two years on facilities and $5,000 and one year on individuals for violations.

There is an exception for news re- porting and legal bets and wagers that is similar to the current law exception, although it is not clearly drafted. It provides an exception if the betting or wagering is legal in the state or foreign country in which the transmission origi- nates and in each state and foreign coun- try in which the transmission is received.

The bill handles the problems of enforcement off-shore, where many Internet betting operations are currently operated, by including a "Sense of the Senate" that the federal government shall have extraterritorial jurisdiction over the transmission or receipt outside the U.S. of bets or wagers or information assisting in the placing of bets or wa- gers.

S.474 was referred to the Senate Judiciary Committee Subcommittee on Technology, Terrorism and Government Information. Senator Kyl is Chairman of that Subcommittee.

TAX CHANGES FOR HORSE OWNERS PROPOSED

Congressman Jim Bunning (R-KY) introduced the "Equine Tax Fairness Actof 1997," H.R. 705, on February 12, 1997. This bill would ease the applica- tion of the passive loss limitations to those in the business of breeding, racing or showing horses.

Senator Mitch McConnell (R-KY) introduced companion language in the Senate, S. 675, on May 1, 1997.

The Tax Reform Act of 1986 pro- vided that if a person did not "materially participate" in an activity, including the horse business, then any losses from that activity were deemed "passive losses" and could only be deducted against income from that activity or

another passive activity. Prior to 1986, a person could deduct losses from his horse business from any income, in- cluding salary, interest and dividends, regardless of the amount of time spent on the activity.

IRS made these provisions even more onerous by adopting regulations that require an individual to spend at least 100 hours a year on an activity to satisfy the passive loss rules.

Senator McConnell's and Con- gressman Bunning's bill would allow an individual to satisfy the passive loss rules and deduct losses from breeding, racing or showing horses regardless of the specific amount of time spent on the activity. An individual would still have to participate regularly, continuously and substantially, but there would be no minimum hour requirement.

The bill would also allow an indi- vidual to count all management time spent in the horse business, even if others who are supervised and controlled by the taxpayer, such as trainers or farm managers, spend more time or are paid for such services. Currently, it is un- clear whether if such individuals spend more hours than an owner, then the time spent by an owner in this activity is not considered with respect to the passive loss requirements. The bill would clarify this.

"Easing the passive loss rules on horse owners is a priority of the AHC," said Will Farish, chairman of the AHC. "Such changes would benefit all horse owners. This is a $112 billion industry that supports 1.4 million jobs. We pay $1.9 billion in taxes to the various levels of government. This tax change is not only fair, but would also stimulate the horse industry and expand the economic base to the benefit of all."

AHC MEETS WITH USDA

The American Horse Council re- cently participated in a meeting of ani-

mal agriculture industry representatives and officials of the Animal and Plant Health Inspection Service (APHIS) of the U.S. Department of Agriculture to discuss issues and concerns. Dr. Marvin Beeman, AHC Trustee and Chairman of the AHC's Health and Regulatory Committee, Mr. Jay Hickey and Mrs. Amy Mann of the American Horse Council attended the meeting.

This was the third meeting held by the Animal Agriculture Coalition with USDA. The discussions have been use- ful for improving relations with the agency. The American Horse Council shares the concern of the agriculture community that decreased funding for APHIS functions and the policy changes brought about by U.S. membership in the World Trade Organization may have adverse affects on the ability of the Department to sufficiently meet its re- sponsibilities, including its ability to respond to emergencies, such as the incursion of a foreign animal disease.

Outbreaks of Venezuelan Equine Encephalomyelitis in Mexico and South America during the past several years are examples of a foreign disease threat that could have a devastating impact on the horse industry. USDA's involve- ment in the standard setting process of the International Office of Epizootics (OIE) is also of interest to the horse industry, which is seeking the establish- ment of an OIE working group on dis- eases of horses. The OIE is designated by the World Trade Organization as the international standard setting organiza- tion for animal health regulations.

Concerns such as these prompted the initial meetings between industry and APHIS that have resulted in posi- tive actions to address the needs of the industry, the states, and the federal agency.

It is very important that the agency maintain an effective monitoring and surveillance effort and a quick response force in the event a foreign disease appears in the U.S. Such an emergency

296 JOURNAL OF EQUINE VETERINARY SCIENCE