Farmers affected by drought can defer some taxes

Staff report

WASHINGTON, D.C.

The Internal Revenue Service said Tuesday that farmers and ranchers forced to sell livestock due to this year’s drought have an extended period of time to replace the livestock and defer tax on any gains from the forced sales.

Farmers and ranchers who sell more livestock than they normally would can defer tax on extra gains from those sales.

To qualify, the livestock generally must be replaced within a four-year period. The IRS is authorized to extend this period if the drought continues.

The one-year extension of the replacement period applies to capital gains realized by eligible farmers and ranchers on sales of livestock held for draft, dairy or breeding purposes due to drought.

Sales of other livestock, such as those raised for slaughter or held for sporting purposes and poultry, are not eligible.

The IRS is providing the relief to any farm located in a county, parish, city or district listed as suffering exceptional or severe drought conditions by the National Drought Mitigation Center during any period between Sept. 1, 2011, and Aug. 31 this year.

In all, 43 states are listed, including some parts of Ohio.

Earlier this month, the U.S. Department of Agriculture designated 85 of Ohio’s 88 counties as natural- disaster areas after the spring and summer droughts, giving eligible farmers federal assistance for crop losses.