October 20, 2006
Cattle producers around the country who are forced to sell animals because of drought will not have to pay capital gains taxes for a year after the parched conditions end, the Internal Revenue Service announced.
If a rancher replaces an animal, his tax liability for the sale will not exist, officials said. Previous legislation gave cattlemen four years beginning in 2002to replace the livestock sold because of drought without recognizing a capital gain.
Using data from a map produced by the National Drought Mitigation Center, the IRS will publish a list of eligible counties for the extension sometime in the near future.
For more information of drought-related tax options, visit the Texas Farm Bureau website at www.txfb.org and click on the "Drought Resources" link. Included with the tax options is information on buying and selling feed in drought-stricken areas, as well as links to drought assistance programs for ranchers.