Useful Links: IRS.gov Help For Hurricane Victims
News Essentials What's Hot News Releases IRS - The Basics IRS Guidance Media Contacts Facts & Figures Around The Nation e-News Subscriptions
The Newsroom Topics Multimedia Center Noticias en Español Radio PSAs Tax Scams/Consumer Alerts The Tax Gap Fact Sheets IRS Tax Tips Armed Forces Latest News
IRS Resources Compliance & Enforcement News Contact Your Local IRS Office Filing Your Taxes Forms & Instructions Frequently Asked Questions Taxpayer Advocate Service Where to File IRS Social Media
| Issue Number: Tax Tip 2021-146
Farmers and ranchers affected by drought have additional time to replace livestock Farmers and ranchers who were forced to sell livestock due to drought may get extra time to replace the livestock and defer tax on any gains from the forced sales. Here are some facts about this to help farmers understand how the deferral works and if they are eligible. - The one-year extension gives eligible farmers and ranchers until the end of the tax year after the first drought-free year to replace the sold livestock.
- The farmer or rancher must be in an applicable region. An applicable region is a county designated as eligible for federal assistance, as well as counties contiguous to that county.
- The farmer's county, parish, city or district included in the applicable region must be listed as suffering exceptional, extreme or severe drought conditions by the National Drought Mitigation Center. All or part of 36 states and one U.S. territory are listed. The list of applicable regions is in Notice 2021-55 on IRS.gov.
- The relief applies to farmers who were affected by drought that happened between September 1, 2020, and August 31, 2021.
- 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.
- The farmers generally must replace the livestock within a four-year period, instead of the usual two-year period.
- Because the normal drought sale replacement period is four years, this extension immediately impacts drought sales that occurred during 2017. But because of previous drought-related extensions affecting some of these areas, the replacement periods for some drought sales before 2017 are also affected.
Details, including an example of how this provision works, are in Notice 2006-82 on IRS.gov.
More Information:
Publication 225, Farmer's Tax Guide
Share this tip on social media -- #IRSTaxTip: Farmers and ranchers affected by drought have additional time to replace livestock. https://go.usa.gov/xMyZQ
Back to Top     
Thank you for subscribing to IRS Tax Tips, an IRS e-mail service. For more information on federal taxes please visit IRS.gov. This message was distributed automatically from the IRS Tax Tips mailing list. Please Do Not Reply To This Message. |
No comments:
Post a Comment