Tax Relief for Farmers Impacted by Drought
There is no doubt that severe and increasing drought has harmed farmers and ranchers across the United States, including in California. Now, such operations that had to sell livestock because of drought might qualify for certain tax relief as announced by the Internal Revenue Service (IRS). Generally speaking, when farmers or ranchers sell livestock for a profit, they must report taxable capital gains on their tax returns if the livestock is not replaced within two years. If the sale was due to drought, the replacement period can be up to four years. Now, however, certain sales will result in an extended replacement period giving parties an additional year before liability for capital gains sets in. This period might be extended by the IRS if serious drought continues. Eligibility for the…