With Notice 2013-62 [PDF 41 KB], farmers and ranchers in the listed areas and whose drought sale replacement period was scheduled to expire at the end of 2013 (or, if a fiscal year taxpayer, at the end of the tax year that includes August 31, 2013) generally have until the end of their next tax year to make the replacement.
Farmers and ranchers previously forced to sell livestock due to drought have an extended period of time in which to replace the livestock and defer tax on any gains from the forced sales.
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 one-year extension of the replacement period provided by today’s notice 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 (e.g., 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 one of the 38 states listed as suffering exceptional, extreme or severe drought conditions by the National Drought Mitigation Center (NDMC), during any weekly period between September 1, 2012, and August 31, 2013.
For more information, contact KPMG’s National Director of Cooperative Tax Services:
David Antoni, in Philadelphia
Or Associate National Director of KPMG’s Cooperative Tax Services
Brett Huston, in Sacramento