WASHINGTON — Clallam and Jefferson County farmers and ranchers who were forced to sell livestock because of drought have an extended period in which to replace the livestock and defer tax on any gains from the forced sales, the Internal Revenue Service has announced.
The one-year extension of the replacement period 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.
Farmers and ranchers in these areas whose drought sale replacement period was scheduled to expire at the end of this tax year, Dec. 31, 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.
Sales of other livestock, such as those raised for slaughter or held for sporting purposes, and poultry are not eligible.
Those who had to sell more livestock than they normally would can defer tax on the extra gains from those sales.
Other Washington counties eligible to the relief are Adams, Asotin, Benton, Chelan, Clark, Columbia, Cowlitz, Douglas, Ferry, Franklin, Garfield, Grant, Grays Harbor, Island, King, Kitsap, Kittitas, Klickitat, Lewis, Lincoln, Mason, Okanogan, Pacific, Pend Oreille, Pierce, San Juan, Skagit, Skamania, Snohomish, Spokane, Stevens, Thurston, Wahkiakum, Walla Walla, Whatcom, Whitman and Yakima.
Details about the tax relief can be found in Notice 2016-60 and in Publication 225, Farmer’s Tax Guide, on www.irs.gov.
