FARMERS AND RANCHERS GET TAX RELIEF

Farmers and ranchers get tax relief. The IRS issued a memorandum, IR-2022-166, that spells out the relief that farmers and ranchers in 44 states facing severe drought, will obtain. Under the Internal Revenue Code, anything outside of your control. that causes you to get behind on your taxes, may qualify under the "Reasonable Cause Criteria, for a penalty abatement. Often, the IRS will also add additional Tax Relief measures to those memo's. In those particular states, where farmers or ranchers were forced to sell livestock due to the severe U.S. drought, the IRS stated that they will give them more time to replace the stock and defer any tax on gains from the forced sale. Farmers and ranchers get tax relief.

In the memo, IR-Notice 2022-43, the IRS listed the states impacted and the ones that are eligible for the tax relief. 44 states in total were listed, along with 2 U.S. territories and two independent nations, who have a compact with the United States. The capital gains tax relief applies to sales of livestock, that were forced due to the drought, whether for draft, dairy, or breeding. The sale of livestock for slaughter or held for sporting purposes was excluded from the tax relief, and the memo specifically stated that the sale had to be due to the drought, not for any other purpose.

The one year extension gives farmers and ranchers until the end of their first tax year after the very first instance of drought that impacted those particular livestock. A detailed description to clarify what the IRS means can be found in Notice 2006-82. The IRS is providing this extension to farmers and ranchers that qualified for the 4 year replacement period. The region must be listed as having gone thru an extreme drought that would qualify as one from the National Drought Mitigation Center.