New Internal Revenue Service
Notice 2024-70 provides a list of the applicable areas, by county or other jurisdiction, designated as eligible for the assistance. The list includes 41 states and other regions for which drought was reported during the 12-month period ending last month (Sept. 1, 2023, to Aug. 31, 2024).
The relief generally applies to capital gains realized by eligible farmers and ranchers on sales or exchanges of livestock held for draft, dairy or breeding purposes. Sales of other livestock, such as those raised for slaughter or held for sport, or poultry, are ineligible.
The sales or exchanges must be solely due to drought causing an area to be designated as eligible for federal assistance. Drought determination is made by the National Drought Mitigation Center.
Livestock generally must be replaced within four years instead of the usual two-year period. This gives eligible farmers and ranchers four years until the end of their first tax year after the first drought-free year to replace the sold or exchanged livestock. Eligible farmers and ranchers whose drought-sale replacement period was scheduled to expire at the end of 2024 will have until the end of their next tax year to replace the sold or exchanged livestock.
The IRS may further extend this replacement period if the drought continues.
