FL - Guidance issued on catastrophic event property damage
Florida provides guidance on catastrophic event property damage for property tax purposes. Topics discussed include the payment of property taxes, […]
Read MoreThe IRS identified drought-stricken areas where tax relief is available to taxpayers that sold or exchanged livestock because of drought. The relief extends the deadlines for taxpayers to replace the livestock and avoid reporting gain on the sales. These extensions apply until the drought-stricken area has a drought-free year.
Sales of livestock due to drought are involuntary conversions of property. Taxpayers can postpone gain on involuntary conversions if they buy qualified replacement property during the replacement period. Qualified replacement property must be similar or related in service or use to the converted property.
Usually, the replacement period ends two years after the tax year in which the involuntary conversion occurs. However, a longer replacement period applies in several situations, such as when sales occur in a drought-stricken area.
Taxpayers have four years to replace livestock they sold or exchanged solely because of drought, flood, or other weather condition. Three conditions apply.
First, the livestock cannot be poultry.
Second, the taxpayer must have held the converted livestock for draft, breeding, or dairy purposes.
Third, the weather condition must make the area eligible for federal assistance.
The IRS extends the four-year replacement period when a taxpayer sells or exchanges livestock due to persistent drought. The extension continues until the taxpayer’s region experiences a drought-free year.
The first drought-free year is the first 12-month period that (1) ends on August 31 in or after the last year of the four-year replacement period, and (2) does not include any weekly period of drought.
The National Drought Mitigation Center produces weekly Drought Monitor maps that report drought-stricken areas. Taxpayers can view these maps at
https://droughtmonitor.unl.edu/
However, the IRS also provided a list of areas where the year ending on August 31, 2022, was not a drought-free year. The replacement period in these areas will continue until the area has a drought-free year.
Florida provides guidance on catastrophic event property damage for property tax purposes. Topics discussed include the payment of property taxes, […]
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