Blitz Bureau
WASHINGTON: The Internal Revenue Service has announced that it is extending tax relief for farmers and ranchers in drought-stricken regions of the country.
The relief comes as parts of the country continue to face prolonged and severe drought.
According to the latest report from the National Drought Mitigation Center, drought conditions continue to fluctuate across the United States, with notable improvements in some regions and worsening conditions in others, Epoch Times said.
Relief for ranchers
The IRS said in a statement that the relief applies to those forced to sell or exchange certain categories of livestock due to persistent drought conditions. “Under the guidance, farmers and ranchers may have an extended period of time to replace their livestock and defer tax on any gains from the forced sales or exchanges,” the agency stated.
According to the guidance issued by the IRS through Notice 2024-70, eligible farmers and ranchers whose drought-sale replacement period was scheduled to expire at the end of 2024 will now have until the end of their first tax year after the first drought-free year to replace the exchanged or sold livestock.
This deferral is designed to mitigate the financial burden on those who had to reduce their herds under involuntary circumstances caused by the drought. Farmers and ranchers who have already sold livestock due to drought and were facing tax obligations on those sales can now use this extended timeline to replace livestock without facing immediate tax consequences, offering some reprieve amid challenging conditions. The relief is limited to livestock held for draft, dairy, or breeding purposes. Livestock raised for slaughter or held for sporting purposes, as well as poultry, do not qualify for the tax deferral.
Applicable in 41 states
The extension applies to farmers and ranchers across 41 states, the District of Columbia, and U.S. territories such as Guam and the Marshall Islands. The relief is extended to areas that experienced “exceptional, extreme, or severe drought” as determined by the National Drought Mitigation Center between September 1, 2023, and August 31, 2024.
In effect, the extension means that livestock must generally be replaced within four years instead of the usual two years before any capital gains tax falls due. The IRS noted that it might further extend the replacement period if the drought continues.
