In the arcane world of racehorse financing, stockbrokers in the Baltimore-Washington area are coming up with schemes that--for the very well-to-do--combine an opportunity to gamble and to avoid some taxes.

While most of the economy is in a deep recession, the prices of racehorses are booming. Aided by a provision in the administration's 1981 tax law speeding up the depreciation schedule for fillies and colts, a provision that would seem to have little bearing to the industrial productivity goals of the legislation, the angles for trying to make a profit are widening, and the constituency of investors is growing.

It is a universe where the bottom line is calculated not only in terms of winnings, but also in terms of such factors as up-front depreciation and the "psychic income" of owning a piece (often about a 35th) of a horse.

The expansion of avenues of investment in racing includes the development of increasingly sophisticated limited partnership mechanisms. One of those developing this avenue is Wayne E. Ries, of Legg Mason Wood Walker. He has helped organize two limited partnerships, Centaur I for thoroughbred racing and breeding, and Sunset Hills, a breeding partnership.

The action is beginning to spread, as Baker Watts, another brokerage here, is preparing its own racing limited partnership. Those in high income brackets realized that the 1981 tax bill, in one of its little noticed provisions, stepped up the depreciation benefits for racehorses and the market in stallions is generally "going through the roof," according to Roger Novak.

Novak, a Baker Watts specialist in corporate finance, has been stunned to watch the prices of single horses reach what someone would pay to buy a medium sized business. "I'm used to seeing these kind of prices for whole corporations, but one horse?"

Centaur I, the Legg Mason partnership, was set up in June, 1980. "It took me 30 days to educate the firm's brokers, and 30 days to reach full subscription," Ries said.

Sunset Breeding, in which the managing general partner is Jerold Hoffberger, former Orioles and National Beer owner turned racing entrepreneur, sold out all the limited partnerships in five days, Ries said. Most of the investors are in the Washington-Baltimore area.

These programs are not, however, for the average $2 bettor. Both Centaur I and Sunset Breeding, in determining "investor suitability standards," required not only that prospective investors have "no need for liquidity"--i.e., have plenty of money in addition to what they invest--but also that they have:

"Net worth (exclusive of home, autos and furnishings) of $250,000 or net worth of $150,000 and income taxable in the 49 percent bracket." To be in the 49 percent bracket this year, a person filing a joint return must have taxable (after deductions and credits) income of at least $60,000.

The structure of the Centaur I limited partnership is, according to its prospectus, as follows:

35 "units" were sold to limited partners at what was expected in 1980 to be a cost of $53,500 each, for a total investment of $1.87 million. Since then, however, the success of the horses purchased by the partnership has reduced the unit cost to $42,000, which is spread out over three years.

At the time the payments are made, subscribers get tax deductions resulting from depreciation of the horses, management costs and operating expenses. These deductions are expected to amount to $30,000, or, if the taxpayer-investor is in the 50 percent bracket, a $15,000 reduction in tax liability.

In effect, the tax deductions reduce the cost of participation in the partnership to $27,000 for the person in the 50 percent bracket, and less for someone who had been in a higher bracket in 1981 and 1982. (The 1981 tax bill lowered the maximum rate from 70 to 50 percent).

Since its creation, Centaur I has purchased 12 thoroughbreds which, according to Ries, have done better than expected, but, "at this point, it's not a lock." A "lock" will occur when, at the end of the three and a half year partnership, all the horses are sold off and the investors come out with a profit.

Of the original 12 horses, one died (which was not a financial loss because all are insured by Lloyds of London), four others were sold, and seven remain. To make a profit (disregarding the tax benefits), the partnership will have to get $750,000 to $800,000 for the horses sold at the end, although the amount may be lower, depending on the success of the horses at winning purses.

Ries contended that three of the remaining horses--Rogers Turn, Glad Heart (both fillies) and Senate Chairman (a colt)--are worth $100,000 to $150,000 each. What investors in race horses are gambling on, however, is that the price of horses will continue to shoot up at record rates, far exceeding the rate of inflation.

Between 1967 and 1981, according to the racing industry, the price of a yearling went from $4,693 to $35,409. Or, treating the prices in terms of constant 1967 dollars to account for inflation, the average price went from $6,693 to $13,004.

If the Centaur I partnership ends up in the black, the proceeds from the sale and syndication of the horses would first pay off liabilities and then pay back partners for their contributions. Whatever, if anything, is left would be split 65 percent to the limited partners (investors); 25 percent to the managing general partner, Equine Equity Corp., owned by Russell Michael of Lexington, Ky.; and 5 percent to the administrative general partner, Legg Mason.

The success or failure of the Centaur I program will be a major factor for Legg Mason in deciding whether to initiate a second partnership in racehorses.

The Sunset Hill breeding partnership, Ries contended, already has demonstrated that it is "a very strong economic program," nearly assured of providing significant returns to investors.

One of the major advantages of the breeding program is that it was able, in large part because of the strength of Hoffberger's name, to get extensive bank financing from the Maryland National Bank. The effect is that investors did not have to put up as much cash while getting large tax deductions.

Investors buying one of the partnership's 33 units put up $28,700 in cash in three payments over three years, and borrowed $24,245, for a total purchase price of $52,945 per unit.

But for the $28,700 up-front cash, each investor will get estimated tax deductions of $35,381, which translates to $17,690 in reduced tax, making the "cost" of the investment for someone in the 50 percent tax bracket just over $11,000.

When the partnership dissolves in December, 1985, the proceeds will, in order, be used to pay off bank loans, including those guaranteed by Hoffberger, then to pay back the investors for cash constributions and then, assuming additional profits: 70 percent would go to the investors (limited patners); 25 percent to Hoffberger, the managing general partner; and 5 percent to Legg Mason, the administrative general partner.

The expansion of limited partnerships and other forms of racehorse ownership is creating a network of both legal and other problems.

Ed Bowen, managing editor of the magazine Blood Horse, said, reflecting one of the simpler difficulties, that track officials in California are trying to figure out how to treat people who own as little as 1/50th of a horse.

Do they get special passes normally limited to owners? Do they get access to the winner's circle if their horse is the victor?

At a more serious level, some states--Bowen cited Florida and New York--place restrictions on the number of persons who can have a direct financial interest in a racehorse. That number has often been set at 12, a severe restriction on persons trying to set up limited partnerships that are often aimed at having up to 35 investors.