A recent change by the Internal Revenue Service gives farmers who have been hit by drought a little more time for recovery. IRS spokesman, Christopher Miller, says the agency has changed the rules when it comes to livestock losses.
He says farmers often sell off livestock during drought conditions, and in order to take advantage of tax conditions under the law, they have to replace the sold off livestock within four years, but the IRS has extended the deadline another year for those who were facing a December 31st deadline this year.
“And that also means that impacted farmers can defer taxes on capital gains on that sale of the livestock,” Miller points out. The IRS regulations say the one-year extension 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. “If you are a farmer in Iowa impacted by drought conditions over the last few years, you will have an extension of time to replace the livestock that you had to get rid of because of those conditions. And you also have an extension of time to defer any taxes that you get because of the gain in selling that livestock,” according to Miller.
Miller urges Iowans to check to see if they qualify under the extension. “To learn more, farmers simply need to read the IRS publication, 225, and that’s available on our website www.irs.gov and we’ll also have a notice there that outlines the affected counties in Iowa,” Miller says. He says you should be able to find all the information you need on the website.