James D. Lynch
Farmers and Ranchers Affected by Drought Have Extra Time to Sell Livestock
Drought can be devastating to farmers and ranchers. Those who were forced to sell livestock due to drought may get an additional year to replace the livestock and defer tax on any gains from the forced sales.
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 livestock that was sold on account of drought. As a result, qualified farmers and ranchers whose drought-sale replacement period was scheduled to expire at the end of this tax year, December 31, 2019, in most cases, now have until the end of their next tax year.
The farmer or rancher must be in an applicable region, which is a county designated as eligible for federal assistance plus counties contiguous to that county. The farmer’s county must be listed as suffering exceptional, extreme or severe drought conditions by the National Drought Mitigation Center. All or part of 32 states, plus Guam, the U.S. Virgin Islands, Puerto Rico, and the Northern Mariana Islands, are listed. The list of applicable regions is in Notice 2006-82 (https://www.irs.gov/pub/irs-drop/n-19-54.pdf).