Horse Breeder Wins in High-Stakes Tax Dispute

In a case followed statewide for its possible effect on the horse-breeding industry, a Ventura Superior Court judge has ruled in favor of a breeder from Lake Sherwood in a high-stakes dispute with the Ventura County tax assessor over the definition of a racehorse.

The decision Monday by Judge Edwin M. Osborne entitles wealthy real estate developer David H. Murdock to a refund of about $115,000 in back taxes and interest for the year 1986-87. Challenges for other tax years back to 1981 could bring Murdock’s total rebate to $500,000 or more, according to Ventura County Assessor Jerry Sanford.

But Sanford said Tuesday that he will appeal the ruling.

Murdock was not available for comment. His attorney, Richard Craigo, hailed the ruling as good news for all racehorse breeders.

At issue in the case were conflicting interpretations of a 1971 state law that gives tax breaks to owners of five racing breeds, including the blue-ribbon Arabians bred at Murdock’s Ventura Farms.

Horses ordinarily are taxed at 1% of their market value, the same as boats, planes and other personal property. But under a law aimed at boosting the state’s horse-racing industry, racehorses qualify for lower taxes, with a ceiling of $1,000 a head.

In Murdock’s case, the county argued that some of his 200 Arabians were ineligible for the break because the animals were never entered in races, trained for races or registered with the state as racehorses.

Murdock successfully contended, however, that a horse should be classified as a racer if it is merely eligible to race or produces a foal eligible to race.

Horse-breeding experts differed Tuesday on the case’s significance.

Nat Gorham, editor of Arabian Horse World magazine in Palo Alto, said the case had limited importance because the valuations were made before changes in federal tax laws reduced the benefits of investing in horses. The resulting sharp drop in horse prices makes them less attractive as a source of property taxes, he said.

Michael Sypolt, treasurer of the Arabian Racing Assn. of California, said the state’s breeders closely watched the case because a decision against Murdock could have encouraged Ventura County’s practices to spread.