IRS Provides List of Drought Counties

  • Agribusiness
  • 10/5/2021

The IRS provides each year a listing of the counties still in drought. This allows farmers who had to sell excess livestock another year to defer the gain.

Livestock producers that need to liquidate excess livestock due to drought normally have at least two years to reinvest their proceeds from excess sales into other similar livestock.  However, if the county the ranch is located in or any contiguous county is considered to still be in drought, then this period is automatically extended for another year.

Recently, the IRS released the list of all counties in the US that qualify for this extension.

The rancher must make an election to take advantage of this provision and relief is only available on the “excess” amount of cattle sold due to drought.  Ranchers should also consider that raised breeding stock is eligible for the special capital gains rate and reinvesting in new breeding stock creates a full ordinary deduction and may not want to make the election.

If you are in this situation, make sure to discuss it with your tax advisor before year-end.

 

This blog contains general information and does not constitute the rendering of legal, accounting, investment, tax, or other professional services. Consult with your advisors regarding the applicability of this content to your specific circumstances.

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