Legislation that would help FFA and 4-H programs could soon receive a vote in a House committee.

House Bill 1918, by state Rep. Steve Kouplen and co-authored by state Rep. Joe Dorman, would exempt cash awards at youth livestock competitions from taxation, requiring that those awards instead be treated as a scholarship for taxable purposes.

“I was pleased this legislation passed out of committee,” said Kouplen,

D-Beggs.  “We need to find ways to assist students in tough economic times to allow them to compete in these

programs.”

House Bill 1918 passed out of the House Revenue and Taxation Committee on Monday and will now move to the full House Appropriations and Budget Committee for a hearing before advancing to the House floor.

“Students don’t make money on the animals they show,” said Dorman, D-Rush Springs. “This is truly an educational opportunity and it’s ridiculous to require some 13-year-old 4-Her or FFA student to file taxes on

a prize that rarely

covers their educational expense.”

The checks received by students involved in competitive livestock shows can range from a few hundred dollars at local events to tens of thousands at national events. 

However, Kouplen noted that the cost of breeding, caring and showing the animals “often times far exceeds the amount of prize money the students might win, if they do place at all in the competition.”

Dorman filed a similar bill last year at the request of Elgin FFA instructor Jerry Renshaw and Mike Doyle, a CPA and father of two students, Carolyn and Steven, who show animals in Elgin.  That bill failed to be considered at the end of the legislative session due to the fiscal impact on the budget.  The language in House Bill 1918 has now been declared to have a minimal impact through a review of the Oklahoma Tax Commission. 

Carolyn Doyle, a senior at Elgin High School and the local FFA vice-president, testified before a House committee on the need for the legislation, saying it would allow students to stretch their dollars further.

“The amount of money we would be able to apply back to our programs would not only help with the cost of showing, but could also be applied to further our education,” said Doyle. “This will be a great benefit for 4-H and FFA students all across the state.”

By declaring the prize money will be treated as a scholarship and therefore tax exempt under state law, legislators will indirectly exempt the prizes from federal taxation as well because of an existing federal tax exemption for scholarships and awards (Code Sec 117 Reg. 1.117-1).

“The federal tax code clearly exempts scholarships and awards,” Dorman said. “House Bill 1918 will dictate that these livestock show prizes will be classified as Scholarships and Awards and, therefore, nontaxable at both the state and federal level. That doubles the benefit for Oklahoma’s FFA and 4-H students.”

“These students gain life skills beyond measure when they participate in these programs,” Kouplen said. “If we can help keep the students active, they learn not only animal care, but speaking and leadership skills that will benefit for the rest of their lives.”