Utah
Drought-Stricken Farmers and Ranchers Have More Time to Replace Livestock
PHOENIX - - Utah
farmers and ranchers who previously were forced to sell livestock due to
drought, like the drought currently affecting much of the nation, have an
extended period of time in which to replace the livestock and defer tax on any
gains from the forced sales, the Internal Revenue Service announced today.
Utah farmers and ranchers who due to drought sell more
livestock than they normally would may defer tax on the extra gains from those
sales. To qualify, 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 announced today generally applies to
capital gains realized by eligible farmers and ranchers on sales of livestock
held for draft, dairy or breeding purposes due to drought. Sales of other livestock, such as those 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, 2015, and Aug. 31, 2016.
All or part of 37 states and Puerto Rico are listed. Any county contiguous to a
county listed by the NDMC also qualifies for this relief.
Per Notice
2016-60, the following Utah Counties qualify: Beaver, Box Elder, Carbon, Davis,
Duchesne, Juab, Millard, Piute, Salt Lake, Sanpete, Sevier, Summit, Tooele,
Utah, Wasatch and Weber.
As a result, Utah farmers and ranchers in these areas
whose drought sale replacement period was scheduled to expire at the end of
this tax year, Dec. 31, 2016, 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
2012. But because of previous drought-related extensions affecting some of
these localities, the replacement periods for some drought sales before 2012
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 2016-60, posted today on
IRS.gov. Details on reporting drought sales and other farm-related tax issues
can be found in Publication
225, Farmer’s Tax Guide, also available on the IRS web site.
If you have questions about whether you qualify for this tax relief or how you report this on your 2016 tax returns, please give our office a call today for a free consultation.
Phone: 801-225-9411 or email us at info@gurrcpa.com
