IRS Provides List of Drought Counties Eligible for One More Year of Deferral
Livestock producers who have to sell livestock due to drought are eligible to defer recognizing this gain as long as they roll over the proceeds into replacement livestock within a certain period. The normal period to roll over these proceeds is four years after the year of sale, however, if the county or any contiguous county is still in a drought situation at the end of the four year period, then the livestock producer gets an extra year to purchase the livestock.
Each year at about this time, the IRS lists the counties in the US that are still in a drought situation. IRS Notice 2020-74 has just been released listing those counties.
Several of these counties have been on this list for over five years and there may be some approaching 10 years.
If you are in this situation, please make sure to review the list.
Paul Neiffer is a certified public accountant and business advisor specializing in income taxation, accounting services, and succession planning for farmers and agribusiness processors. Paul is a principal with CliftonLarsonAllen in Walla Walla, Washington, as well as a regular speaker at national conferences and contributor at agweb.com. Raised on a farm in central Washington, he has been immersed in the ag industry his entire life, including the last 30 years professionally. Paul and his wife purchase an 180 acre ranch in 2016 and enjoy keeping it full of animals.
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