Farmers and ranchers forced to sell livestock due to the drought have an extended period of time to replace their livestock and defer tax on any gains from the sales, the Internal Revenue Service announced.
Ordinarily, livestock ordinarily must be replaced within a four-year period. The IRS on Tuesday granted a one-year extension.
The IRS said the extension generally applies to capital gains realized by farmers and ranchers on drought-related 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, and sales of poultry are not eligible for tax relief.
The IRS is providing relief to jurisdictions in 30 states listed as suffering exceptional, extreme or severe drought conditions by the National Drought Mitigation Center during any weekly period between Sept. 1, 2013, and Aug. 31 this year. That includes most of Northern California, including the counties of El Dorado, Placer, Sacramento, Yolo and Yuba.
In most cases, the IRS said, farmers and ranchers whose drought sale replacement period was scheduled to expire Dec. 31 now have until the end of 2015.
More details can be found under the Farmer’s Tax Guide at www.irs.gov