Posted October 25, 2013
The Internal Revenue Service (IRS) announced that farmers and ranchers affected by drought have an additional year to replace livestock before capital gains apply, according to an article by Tri Valley Central available here.
Farmers and ranchers who sell more livestock than normal usually have four years in which to replace the livestock before capital gains applies to the sale. The announcement by the IRS extends this period by one more year.
Bill Brunson, IRS spokesman, said the extension generally applies to capital gains realized by eligible farmers and ranchers on sales of livestock held for draft, dairy or breeding purposes due to drought. Sales of livestock raised for slaughter or held for sporting purposes, and poultry, are not eligible.
The extension applies to any farm located in a county, parish, city, borough, census area or district, listed as suffering exceptional, extreme or severe drought conditions by the National Drought Mitigation Center (NDMC) during any weekly period between Sept. 1, 2012 and Aug. 31, 2013, according to an Ag Weekly article available here. Any county contiguous to a listed county is also eligible for relief.
For more detailed information, IRS Notice 2013-62 is available here. For more information on Selected Farm and Small Business Tax Issues, an article by Roger A. McEowen and Neil E. Harl originally published in the Drake Journal of Agricultural Law is available here.