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IRS Expands Tax Relief For Drought-Hit Farmers

by Glen Shapiro, Tax-News.com, New York

04 October 2017


US farmers and ranchers who previously were forced to sell livestock due to drought now have been allowed an additional year to replace the livestock and defer tax on any gains from the forced sales, the Internal Revenue Service has announced.

The concession covers those counties designated as eligible for federal assistance, plus counties contiguous to that county. All or part of 42 states, plus the District of Columbia, are included, as set out in newly released Notice 2017-53.

This relief generally applies to capital gains realized by eligible farmers and ranchers on sales of livestock held for draft, dairy, or breeding purposes. Sales of other livestock, such as those raised for slaughter or held for sporting purposes, or poultry are not eligible.

To qualify, the sales must be solely due to drought, flooding, or other severe weather causing the region to be designated as eligible for federal assistance.

Under these circumstances, livestock generally must be replaced within a four-year period, instead of the usual two-year period. But in addition, the IRS is authorized to further extend this replacement period if the drought continues.

The one-year extension, announced September 27, gives eligible farmers and ranchers until the end of the tax year after the first drought-free year to replace the sold livestock. Details, including an example of how this provision works, can be found in Notice 2006-82, available on IRS.gov.

TAGS: tax | Internal Revenue Service (IRS) | United States

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