With the prediction of coming rain, the latest drought may be ending, but its effects remain.
Farmers and ranchers who were forced, because of the drought, to sell more livestock than planned are eligible to defer tax on any extra gains from the forced sale, the Internal Revenue Service said this week in a release.
To qualify, the livestock generally must be replaced within a four-year period.
The one-year extension of the replacement period applies to capital gains realized by eligible Washington farmers and ranchers on sales of livestock held for draft, dairy or breeding purposes during the drought. Sales of other livestock, such as those raised for slaughter or held for sporting purposes, are not eligible.
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The relief is extended to any farm located in any of 26 selected Washington counties including Pierce, Thurston, King, Kitsap and Mason.
Details concerning the relief are available in Notice 2014-60 posted at 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 at the IRS site.