Income tax considerations for drought related sales in 2013
Is there a deferral of income from the sale of cattle to 2014 because of forced sale due to drought in 2013? There was for 2011 and 2012 but I haven't seen anything for 2013.There is an extension for replacing breeding and dairy livestock.
On page 9 of IRS Publication 225 "Farmer's Tax Guide" for 2013 Returns it states:
Sales Caused by Weather-Related Conditions
If you sell or exchange more livestock, including poultry, than you normally would in a year because of a drought, flood, or other weather-related condition, you may be able to postpone reporting the gain from the additional animals until the next year. You must meet all the following conditions to qualify.
- Your principal trade or business is farming.
- You use the cash method of accounting.
- You can show that, under your usual business practices, you would not have sold or exchanged the additional animals this year except for the weather-related condition.
- The weather-related condition caused an area to be designated as eligible for assistance by the federal government.
To find out if your county was declared a disaster area for drought by the Secretary of Ag go to www.usda.gov/drought