IRS spokesman Christopher Miller says the agency has changed the rules when it comes to livestock losses.
Miller says farmers often sell off more livestock than usual during a drought and in order to take advantage of tax benefits under the law, they have to replace those livestock within a specified time.
That time limit had been four years, but the IRS has extended the deadline another year for those who were facing a December 31st deadline this year.
“That also means that impacted farmers can defer taxes on capital gains from that sale of the livestock,” Miller says.
The IRS regulations say the one-year extension 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, like those raised for slaughter or held for sporting purposes, and poultry are not eligible.
Miller says the overall goal is to provide a break to farmers who were impacted by the drought.
“You will have an extension of time to replace the livestock that you had to get rid of because of those conditions,” Miller says, “and you also have an extension of time to defer any taxes that you get because of the gain in selling that livestock.”
Miller urges Nebraskans to check to see if they qualify under the extension. They need to read IRS publication #225, available on the website www.IRS.gov.