Arizona gets more time from IRS to replace livestock | Business
Farmers and ranchers in Arizona and 42 other states have been given an extension of time to replace livestock sold due to drought.
Those who were forced to sell livestock due to drought have an extended time period to defer tax on any of the gains from the forced sales. To qualify for this deferment the livestock generally must be replaced within a four-year-period; the IRS is authorized to extend this period if the drought continues.
The one year extension of the replacement period by the IRS earlier this week applies to capital gains on sales of livestock that are held for draft, dairy, or breeding purposes; livestock that is strictly raised for slaughter or held for sporting purposes and poultry are not eligible.
The IRS is providing this relief to any farm located in a county, parish, city or district, listed as suffering exceptional, extreme or severe drought conditions by the National Drought Mitigation Center (NDMC), during any weekly period between Sept. 1, 2011, and Aug. 31, 2012. All or part of 43 states are listed. Any county contiguous to a county listed by the NDMC also qualifies for this relief.
The NDMC-designated counties for Arizona are: Apache, Cochise, Coconino, Gila, Graham, Greenlee, La Paz, Maricopa, Mohave, Navajo, Pima, Pinal, Santa Cruz, Yavapai, and Yuma.
As a result, farmers and ranchers in these areas whose drought sale replacement period was scheduled to expire at the end of this tax year, Dec. 31, 2012, in most cases, will now have until the end of their next tax year. Because the normal drought sale replacement period is four years, this extension immediately impacts drought sales that occurred during 2008. But because of previous drought-related extensions affecting some of these localities, the replacement periods for some drought sales before 2008 are also affected. Additional extensions will be granted if severe drought conditions persist.
Details on this relief, including a list of NDMC-designated counties, are available in Notice 2012-62 (http://www.irs.gov/pub/irs-drop/), soon to be posted on IRS.gov.
Details on reporting drought sales and other farm-related tax issues can be found in Publication 225, Farmer’s Tax Guide, (http://www.irs.gov/pub/irs-pdf/p225.pdf), currently available on IRS.gov.