Ah, the idyllic visions of American farmlands: red barns, green pastures, and frolicking animals. The farmer image has long been an American icon. However, with the weather patterns changing and agribusiness entering the picture, the farming landscape is definitely shifting.
Obviously, with the weather issues the nation has been facing, the agricultural industry has taken a few hits. The drought is something we hear all the time in Colorado. There are constant public awareness campaigns on TV’s, buses, and the radio. Every year the snowfall is closely followed to see if we can make a much needed dent in our drought problem. What you often don’t hear about is the tax effect it has had on the agricultural and ranching industries.
Fortunately, farmers and ranchers who have been forced to sell their livestock based on drought problems have been offered an IRS tax relief grant.
The International Revenue Service has extended the time to replace livestock that farmers were forced to sell due to the drought. This will allow for deferral on any gains received from the forced livestock sale. The specifics are as follows:
- If the drought led to a forced livestock sale, the farmers can defer tax on the extra gains from those sales.
- The livestock must be replaced within a four-year period. If the drought continues, the period may extend.
- Interestingly enough, the sale of other specific livestock: slaughter, sporting, or poultry, are not eligible.
- The affected farming area must be listed in the 30 states deemed as suffering exceptional, extreme or severe drought conditions. The areas spread across the country.
To understand more about this tax relief option, Notice 2014-60 has been listed on IRS.gov. This notice includes the specific states and counties where the relief applies. Also, the tax rules are mentioned in Publication 225, Farmer’s Tax Guide on IRS.gov.
Has your state or livelihood been affected by the drought? Do you know anyone who dealt with these taxation issues?