| Industry Issues / Rules for forced sales of livestock due to a drought, a flood, or other weather-related conditions |  |
|||
|
You should be aware of two tax rules
that are designed to alleviate some of the tax problems caused by a
forced sale of livestock. The first provision permits cash
basis farmers to elect to defer for one year the gain from forced sales
of livestock on account of a drought, a flood, or other weather-related
conditions. This one-year elective deferral is available only if the
farmer establishes that, under his usual business practices, the
livestock sale would not have occurred but for the weather conditions
that resulted in the area being designated as eligible for federal
assistance. Secondly, the tax code permits farmers who are forced by a drought, a flood, or other weather-related conditions to sell more draft, breeding, or dairy animals than they otherwise would have sold to treat the sales as involuntary conversions. Thus, if the farmer reinvests the gain in similar property within a two-year period, the farmer can defer the gain from the forced sale. |
Home
Tax topics |
|||