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 extended relief can include meeting the following criteria:
- Being located in a designated area impacted by severe drought
- Selling livestock held for breeding, dairy, or draft purposes (not for sport or slaughter)
As conditions change, including drought or other disasters, it is important to know how any relief by the IRS can help you and your operations.
Contact a Tax Lawyer in San Francisco Today
If you need assistance with any tax-related concerns, please do not wait to schedule an appointment with SF Tax Counsel. Call 415.318.3990 or contact us online to learn how a San Francisco tax attorney can help with your tax questions and legal issues.