Livestock Sold Because of Drought

The IRS provides additional time to replace livestock that were sold because of the prolonged drought in parts of the United States. Each September, the IRS issues a listing of the counties and parishes that experienced exceptional, extreme, or severe drought to help taxpayers determine whether the replacement period has been extended for their area.

The list, found in Notice 2008-86 can be used instead of the U.S. Drought Monitor maps to determine whether an extended replacement period applies for livestock sold because of drought. The notice also explains the circumstances under which the four-year replacement period under Section 1033(e)(2) is extended for livestock sold on account of drought.

The full text of Notice 2008-86 is available on NATP’s website. This is a great website for both tax professionals and taxpayers. The NATP provides updated explanations for IRS updates and changes.

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