Drought-related sellers of livestock get time for replacements

Farmers and ranchers who were forced to sell livestock due to drought may have an additional year to replace the livestock and defer tax on any gains from the forced sales, according to the Internal Revenue Service.

To qualify for relief, farmers or ranchers must have sold livestock on account of drought conditions in an applicable region (a county or other jurisdiction designated as eligible for federal assistance plus counties contiguous to it). The 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. More information on how the one-year extension works can be found in Notice 2006-82.