Sale of Livestock on Account of Drought

Sale of Livestock on Account of Drought

Cross References

• Notice 2022-43

An involuntary conversion occurs when property is destroyed, stolen, condemned, or disposed of under a threat of condemnation, and the taxpayer receives other property, or money, in payment for the property, such as insurance proceeds or a condemnation award. The involuntary conversion is treated as a sale or exchange. Gain or loss is the difference between the net payment received and the adjusted basis of the converted property.

Gain from an involuntary conversion is postponed if the taxpayer receives or purchases replacement property within a specified replacement period. There is a special rule for livestock sold under weather-related conditions in an area designated as eligible for assistance by the federal government. IRC section 1033(e)(2)(A) states that the replacement period ends four years after the close of the first taxable year in which any part of the gain from the conversion is realized. IRC section 1033(e)(2)(B) states that the IRS may extend this replacement period on a regional basis if the IRS determines weather-related conditions continue to affect a region for more than three years. Thus, if a sale or exchange on account of drought qualifies for this special rule, the 4-year replacement period can be extended. The IRS issued Notice 2006-82 which states for this purpose, the first droughtfree year for the applicable region is the first 12-month period that: 1) Ends August 31, 2) Ends in or after the last year of the taxpayer’s 4-year replacement period, and 3) Does not include any weekly period for which exceptional, extreme, or severe drought

is reported for any location in the applicable region.

Notice 2006-82 also states the IRS will publish in September of each year a list of counties, boroughs, census areas, islands, municipalities, or parishes for which exceptional, extreme, or severe drought was reported during the preceding 12 months. Taxpayers may use this list to determine whether exceptional, extreme, or severe drought has been reported for any location in the applicable region.

Notice 2022-43 states the 12-month period ending August 31, 2022 is not a drought-free year for the following applicable regions listed below. Accordingly, for a taxpayer who qualified for a 4-year replacement period for livestock sold or exchanged on account of drought and whose replacement period is scheduled to expire at the end of 2022 (or, in the case of a fiscal year taxpayer, at the end of the fiscal year that includes August 31, 2022), the replacement period is extended if the applicable region includes any of the following regions listed below. This extension will continue until the end of the first taxable year ending after a drought-free year for the applicable region.

Alabama Florida

Counties of Colbert and Lauderdale. Counties of Alachua, Broward, Charlotte, Collier,

Alaska Martin, Okeechobee, Palm Beach, and Sarasota. Boroughs of Denali, Kenai Peninsula, and

Municipality of Anchorage. Counties of Bryan, Bulloch, Chatham, Colquitt,

Arizona Evans, Franklin, Gilmer, Hall, Hart, Liberty, Long, Counties of Apache, Cochise, Coconino, Graham, Lumpkin, McIntosh, Madison, Mitchell, Murray, Greenlee, La Paz, Maricopa, Mohave, Navajo, Pima, Oglethorpe, Pickens, Tattnall, Tift, Turner, Wayne, and Pinal, Santa Cruz, Yavapai, and Yuma. Worth.

Arkansas Hawaii

Counties of Arkansas, Ashley, Baxter, Benton, Counties of Hawaii, Honolulu, Kalawao, Kauai, and Boone, Bradley, Calhoun, Carroll, Chicot, Clark, Clay, Maui. Cleburne, Cleveland, Columbia, Conway, Craighead,

Faulkner, Franklin, Fulton, Garland, Grant, Greene, Counties of Ada, Adams, Bannock, Bear Lake, Hempstead, Hot Spring, Howard, Independence, Benewah, Bingham, Blaine, Boise, Bonner, Izard, Jackson, Jefferson, Johnson, Lafayette, Bonneville, Boundary, Butte, Camas, Canyon, Lawrence, Lee, Lincoln, Little River, Logan, Lonoke, Caribou, Cassia, Clark, Clearwater, Custer, Elmore, Madison, Marion, Miller, Mississippi, Montgomery, Franklin, Fremont, Gem, Gooding, Idaho, Jefferson, Nevada, Newton, Ouachita, Perry, Phillips, Pike, Jerome, Kootenai, Latah, Lemhi, Lewis, Lincoln, Polk, Pope, Pulaski, Randolph, Saint Francis, Saline, Madison, Minidoka, Nez Perce, Oneida, Owyhee, Scott, Searcy, Sebastian, Sevier, Sharp, Stone, Payette, Power, Shoshone, Teton, Twin Falls, Valley, Union, Van Buren, Washington, White, and Yell. and Washington.

California Illinois

Counties of Alameda, Alpine, Amador, Butte, Counties of Alexander, Boone, Carroll, Champaign, Calaveras, Colusa, Contra Costa, Del Norte, El Coles, DeKalb, Douglas, Edgar, Jo Daviess, Kane, Dorado, Fresno, Glenn, Humboldt, Imperial, Inyo, Lake, Lee, McHenry, Moultrie, Ogle, Piatt, Rock Kern, Kings, Lake, Lassen, Los Angeles, Madera, Island, Stephenson, Vermilion, Whiteside, and Marin, Mariposa, Mendocino, Merced, Modoc, Winnebago. Mono, Monterey, Napa, Nevada, Orange, Placer,

Bernardino, San Diego, San Francisco, San Joaquin, Counties of Adair, Adams, Appanoose, Benton, San Luis Obispo, San Mateo, Santa Barbara, Santa Black Hawk, Boone, Bremer, Buchanan, Buena Vista, Clara, Santa Cruz, Shasta, Sierra, Siskiyou, Solano, Butler, Carroll, Cass, Cedar, Cerro Gordo, Cherokee, Sonoma, Stanislaus, Sutter, Tehama, Trinity, Tulare, Clarke, Clay, Clinton, Crawford, Davis, Delaware, Tuolumne, Ventura, Yolo, and Yuba. Des Moines, Dickinson, Dubuque, Emmet, Fayette,

Colorado Hardin, Harrison, Henry, Humboldt, Ida, Iowa, Counties of Adams, Alamosa, Arapahoe, Archuleta, Jackson, Jasper, Jefferson, Johnson, Jones, Keokuk, Baca, Bent, Boulder, Broomfield, Chaffee, Cheyenne, Kossuth, Lee, Linn, Lucas, Madison, Mahaska, Clear Creek, Conejos, Costilla, Crowley, Custer, Marion, Marshall, Monona, Monroe, Montgomery, Delta, Denver, Dolores, Douglas, Eagle, Elbert, El O’Brien, Palo Alto, Plymouth, Pocahontas, Polk, Paso, Fremont, Garfield, Gilpin, Grand, Gunnison, Poweshiek, Sac, Scott, Sioux, Story, Tama, Union, Hinsdale, Huerfano, Jackson, Jefferson, Kiowa, Van Buren, Wapello, Warren, Washington, Webster,

Lincoln, Logan, Mesa, Mineral, Moffat, Montezuma,

Pitkin, Prowers, Pueblo, Rio Blanco, Rio Grande, Counties of Allen, Anderson, Barber, Barton, Routt, Saguache, San Juan, San Miguel, Sedgwick, Bourbon, Butler, Chautauqua, Cherokee, Cheyenne, Summit, Teller, Washington, Weld, and Yuma. Clark, Clay, Cloud, Coffey, Comanche, Cowley,

Connecticut Ellsworth, Finney, Ford, Gove, Graham, Grant, Gray, Counties of Fairfield, Hartford, Litchfield, Middlesex, Greeley, Greenwood, Hamilton, Harper, Harvey, New Haven, New London, Tolland, and Windham. Haskell, Hodgeman, Jewell, Kearny, Kingman,

McPherson, Marion, Marshall, Meade, Mitchell, Mississippi Montgomery, Morton, Nemaha, Neosho, Ness, Counties of Adams, Alcorn, Amite, Attala, Benton, Norton, Osborne, Ottawa, Pawnee, Phillips, Pratt, Bolivar, Calhoun, Carroll, Chickasaw, Claiborne, Rawlins, Reno, Republic, Rice, Riley, Rooks, Rush, Clay, Coahoma, Copiah, DeSoto, Franklin, Grenada, Russell, Saline, Scott, Sedgwick, Seward, Sheridan, Hinds, Holmes, Humphreys, Issaquena, Itawamba, Sherman, Smith, Stafford, Stanton, Stevens, Jefferson, Lafayette, Lawrence, Leake, Lee, Leflore, Sumner, Thomas, Trego, Wallace, Washington, Lincoln, Madison, Marshall, Monroe, Montgomery, Wichita, Wilson, and Woodson. Pike, Pontotoc, Prentiss, Quitman, Sharkey,

Kentucky Union, Warren, Washington, Wilkinson, and Yazoo. Counties of Ballard, Breckinridge, Caldwell, Calloway, Carlisle, Christian, Edmonson, Fulton, Missouri Graves, Grayson, Hardin, Hart, Hickman, Livingston, Counties of Barry, Barton, Boone, Butler, Camden, Lyon, McCracken, Marshall, and Trigg. Carter, Cedar, Christian, Cole, Cooper, Crawford,

Louisiana Gasconade, Greene, Hickory, Howard, Howell, Parishes of Acadia, Allen, Ascension, Assumption, Iron, Jackson, Jasper, Johnson, Laclede, Lafayette, Avoyelles, Beauregard, Bienville, Bossier, Caddo, Lawrence, McDonald, Maries, Miller, Mississippi, Calcasieu, Caldwell, Cameron, Catahoula, Claiborne, Moniteau, New Madrid, Newton, Oregon, Ozark, Concordia, De Soto, East Baton Rouge, East Carroll, Pemiscot, Pettis, Phelps, Polk, Pulaski, Reynolds, East Feliciana, Evangeline, Franklin, Grant, Iberia, Ripley, Saint Charles, Saint Clair, Saint Louis, Saline, Iberville, Jackson, Jefferson, Jefferson Davis, Scott, Shannon, Stoddard, Stone, Taney, Texas, Lafayette, Lafourche, La Salle, Lincoln, Livingston, Vernon, Warren, Wayne, Webster, and Wright. Madison, Morehouse, Natchitoches, Orleans, Ouachita, Plaquemines, Pointe Coupee, Rapides, Montana Red River, Richland, Sabine, Saint Bernard, Saint Counties of Beaverhead, Big Horn, Blaine, Charles, Saint Helena, Saint James, Saint John Broadwater, Carbon, Carter, Cascade, Chouteau, the Baptist, Saint Landry, Saint Martin, Saint Mary, Custer, Daniels, Dawson, Deer Lodge, Fallon, Tangipahoa, Tensas, Terrebonne, Union, Vermilion, Fergus, Flathead, Gallatin, Garfield, Glacier, Golden Vernon, Washington, Webster, West Baton Rouge, Valley, Granite, Hill, Jefferson, Judith Basin, Lake, West Carroll, West Feliciana, and Winn. Lewis and Clark, Liberty, Lincoln, McCone, Madison,

Maine Petroleum, Phillips, Pondera, Powder River, Powell, Counties of Androscoggin, Cumberland, Franklin, Prairie, Ravalli, Richland, Roosevelt, Rosebud, Hancock, Kennebec, Knox, Lincoln, Oxford, Sanders, Sheridan, Silver Bow, Stillwater, Sweet Piscataquis, Sagadahoc, Somerset, Waldo, and York. Grass, Teton, Toole, Treasure, Valley, Wheatland,

Massachusetts

Essex, Franklin, Hampden, Hampshire, Middlesex, Counties of Adams, Antelope, Arthur, Banner, Norfolk, Plymouth, Suffolk, and Worcester. Blaine, Boone, Box Butte, Boyd, Brown, Buffalo,

Michigan Clay, Colfax, Cuming, Custer, Dakota, Dawes, County of Gogebic. Dawson, Deuel, Dixon, Dodge, Douglas, Dundy,

Minnesota Garfield, Gosper, Greeley, Hall, Hamilton, Harlan, Counties of Aitkin, Anoka, Becker, Beltrami, Benton, Hayes, Hitchcock, Holt, Hooker, Howard, Jefferson, Big Stone, Blue Earth, Brown, Carlton, Carver, Johnson, Kearney, Keith, Keya Paha, Kimball, Cass, Clay, Clearwater, Cook, Cottonwood, Crow Knox, Lancaster, Lincoln, Logan, Loup, McPherson, Wing, Dakota, Douglas, Faribault, Grant, Hennepin, Madison, Merrick, Morrill, Nance, Nemaha, Hubbard, Isanti, Itasca, Jackson, Kandiyohi, Kittson, Nuckolls, Otoe, Pawnee, Perkins, Phelps, Pierce, Koochiching, Lac qui Parle, Lake, Lake of the Woods, Platte, Polk, Red Willow, Richardson, Rock, Saline, Le Sueur, Lincoln, Lyon, McLeod, Mahnomen, Saunders, Scotts Bluff, Seward, Sheridan, Sherman, Marshall, Martin, Meeker, Mille Lacs, Morrison, Sioux, Stanton, Thayer, Thomas, Thurston, Valley, Murray, Nicollet, Norman, Otter Tail, Pennington, Washington, Wayne, Wheeler, and York. Pine, Pipestone, Polk, Pope, Ramsey, Red Lake, Redwood, Renville, Rice, Roseau, Saint Louis, Scott, Sherburne, Sibley, Stearns, Stevens, Todd, Wadena, Washington, Watonwan, Wilkin, Wright, and Yellow Medicine.

Nevada Oklahoma

City of Carson City. Counties of Churchill, Clark, Counties of Adair, Alfalfa, Atoka, Beaver, Beckham, Douglas, Elko, Esmeralda, Eureka, Humboldt, Blaine, Bryan, Caddo, Canadian, Carter, Cherokee, Lander, Lincoln, Lyon, Mineral, Nye, Pershing, Choctaw, Cimarron, Cleveland, Coal, Comanche, Storey, Washoe, and White Pine. Cotton, Craig, Creek, Custer, Delaware, Dewey,

New Hampshire Harper, Haskell, Hughes, Jackson, Jefferson, Counties of Cheshire, Coos, Hillsborough, Johnston, Kay, Kingfisher, Kiowa, Latimer, Le Flore, Merrimack, Rockingham, and Strafford. Lincoln, Logan, Love, McClain, McCurtain, McIntosh,

New Jersey Nowata, Okfuskee, Oklahoma, Okmulgee, Osage, Counties of Atlantic, Bergen, Cape May, Ottawa, Pawnee, Payne, Pittsburg, Pontotoc, Cumberland, Essex, Hudson, Hunterdon, Mercer, Pottawatomie, Pushmataha, Roger Mills, Rogers,

Somerset, Sussex, and Union. Tulsa, Wagoner, Washington, Washita, Woods, and

New Mexico

Colfax, Curry, DeBaca, Dona Ana, Eddy, Grant, Counties of Baker, Benton, Clackamas, Clatsop, Guadalupe, Harding, Hidalgo, Lea, Lincoln, Los Columbia, Coos, Crook, Curry, Deschutes, Douglas, Alamos, Luna, McKinley, Mora, Otero, Quay, Rio Gilliam, Grant, Harney, Hood River, Jackson, Arriba, Roosevelt, Sandoval, San Juan, San Miguel, Jefferson, Josephine, Klamath, Lake, Lane, Lincoln, Santa Fe, Sierra, Socorro, Taos, Torrance, Union, and Linn, Malheur, Marion, Morrow, Multnomah, Polk, Valencia. Sherman, Tillamook, Umatilla, Union, Wallowa,

New York

Nassau, New York, Orange, Putnam, Queens, Counties of Bristol, Kent, Newport, Providence, and Richmond, Rockland, Suffolk, Ulster, and Washington. Westchester.

South Carolina

North Carolina Counties of Aiken, Allendale, Anderson, Beaufort, Counties of Alexander, Anson, Beaufort, Bertie, Berkeley, Calhoun, Cherokee, Chester, Chesterfield, Bladen, Brunswick, Cabarrus, Camden, Carteret, Clarendon, Colleton, Darlington, Dillon, Edgefield, Caswell, Catawba, Chatham, Chowan, Cleveland, Fairfield, Florence, Georgetown, Hampton, Horry, Columbus, Craven, Cumberland, Currituck, Dare, Jasper, Kershaw, Lancaster, Lee, Lexington, Davidson, Davie, Duplin, Edgecombe, Gaston, McCormick, Marion, Marlboro, Newberry, Gates, Granville, Greene, Halifax, Harnett, Hertford, Orangeburg, Richland, Saluda, Sumter, Union, Hoke, Hyde, Iredell, Johnston, Jones, Lee, Lenoir, Williamsburg, and York. Lincoln, Martin, Mecklenburg, Montgomery, Moore,

Pamlico, Pasquotank, Pender, Perquimans, Person, Counties of Aurora, Beadle, Bennett, Bon Homme, Pitt, Richmond, Robeson, Rowan, Sampson, Brookings, Brown, Brule, Buffalo, Butte, Campbell, Scotland, Stanly, Tyrrell, Union, Wake, Washington, Charles Mix, Clay, Corson, Custer, Davison, Deuel, Wayne, Wilkes, Wilson, and Yadkin. Dewey, Douglas, Edmunds, Fall River, Faulk, Grant,

North Dakota Hughes, Hutchinson, Hyde, Jackson, Jerauld, Counties of Adams, Barnes, Benson, Billings, Jones, Kingsbury, Lake, Lawrence, Lincoln, Lyman, Bottineau, Bowman, Burke, Burleigh, Cass, McCook, McPherson, Meade, Mellette, Miner, Cavalier, Dickey, Divide, Dunn, Eddy, Emmons, Minnehaha, Moody, Oglala Lakota, Pennington, Foster, Golden Valley, Grand Forks, Grant, Griggs, Perkins, Potter, Roberts, Sanborn, Spink, Stanley, Hettinger, Kidder, LaMoure, Logan, McHenry, Sully, Todd, Tripp, Turner, Union, Walworth, Yankton, McIntosh, McKenzie, McLean, Mercer, Morton, and Ziebach. Mountrail, Nelson, Oliver, Pembina, Pierce, Ramsey,

Sheridan, Sioux, Slope, Stark, Steele, Stutsman, Counties of Benton, Carroll, Chester, Crockett, Towner, Traill, Walsh, Ward, Wells, and Williams. Decatur, Dickson, Dyer, Fayette, Gibson, Hardeman,

Madison, Maury, Montgomery, Obion, Shelby, Vermont Stewart, Tipton, Wayne, Weakley, and Williamson. County of Windham.

Texas Virginia

Counties of Anderson, Andrews, Angelina, Aransas, Cities of Chesapeake, Danville, Suffolk, and Virginia Archer, Armstrong, Atascosa, Austin, Bailey, Beach. Counties of Accomack, Charlotte, Halifax, Bandera, Bastrop, Baylor, Bee, Bell, Bexar, Blanco, Mecklenburg, Northampton, Pittsylvania, and Borden, Bosque, Bowie, Brazoria, Brazos, Brewster, Southampton. Briscoe, Brooks, Brown, Burleson, Burnet, Caldwell, Calhoun, Callahan, Camp, Carson, Cass, Castro, Washington Chambers, Cherokee, Childress, Clay, Cochran, Counties of Adams, Asotin, Benton, Chelan, Coke, Coleman, Collin, Collingsworth, Colorado, Clark, Columbia, Cowlitz, Douglas, Ferry, Franklin, Comal, Comanche, Concho, Cooke, Coryell, Cottle, Garfield, Grant, Island, Kittitas, Klickitat, Lincoln, Crane, Crockett, Crosby, Culberson, Dallam, Dallas, Okanogan, Pend Oreille, San Juan, Skagit, Dawson, Deaf Smith, Delta, Denton, DeWitt, Skamania, Spokane, Stevens, Wahkiakum, Walla Dickens, Dimmit, Donley, Duval, Eastland, Ector, Walla, Whatcom, Whitman, and Yakima. Edwards, Ellis, Erath, Falls, Fannin, Fayette, Fisher, Floyd, Foard, Fort Bend, Franklin, Freestone, Frio, Wisconsin Gaines, Galveston, Garza, Gillespie, Glasscock, Counties of Adams, Ashland, Bayfield, Columbia, Goliad, Gonzales, Gray, Grayson, Gregg, Grimes, Dane, Dodge, Douglas, Dunn, Fond du Lac, Grant, Guadalupe, Hale, Hall, Hamilton, Hansford, Green, Green Lake, Iron, Jefferson, Juneau, Hardeman, Hardin, Harris, Harrison, Hartley, Haskell, Kenosha, Lafayette, Marquette, Milwaukee, Pierce, Hays, Hemphill, Henderson, Hidalgo, Hill, Hockley, Polk, Racine, Rock, Saint Croix, Sauk, Walworth, Hood, Hopkins, Houston, Howard, Hudspeth, Hunt, Waukesha, and Winnebago. Hutchinson, Irion, Jack, Jackson, Jasper, Jeff Davis, Jefferson, Jim Hogg, Jim Wells, Johnson, Jones, Wyoming Karnes, Kaufman, Kendall, Kenedy, Kent, Kerr, Counties of Albany, Big Horn, Campbell, Carbon, Kimble, King, Kinney, Kleberg, Knox, Lamar, Lamb, Converse, Crook, Fremont, Goshen, Hot Springs, Lampasas, La Salle, Lavaca, Lee, Leon, Liberty, Johnson, Laramie, Lincoln, Natrona, Niobrara, Park, Limestone, Lipscomb, Live Oak, Llano, Loving, Platte, Sheridan, Sublette, Sweetwater, Teton, Uinta, Lubbock, Lynn, McCulloch, McLennan, McMullen, Washakie, and Weston. Madison, Marion, Martin, Mason, Matagorda, Maverick, Medina, Menard, Midland, Milam, Mills, Federated States of Micronesia Mitchell, Montague, Montgomery, Moore, Morris, States of Chuuk and Pohnpei. Motley, Nacogdoches, Navarro, Newton, Nolan, Nueces, Ochiltree, Oldham, Orange, Palo Pinto, Republic of the Marshall Islands Panola, Parker, Parmer, Pecos, Polk, Potter, Presidio, Atolls of Ailinglaplap, Kwajalein, and Wotje. Rains, Randall, Reagan, Real, Red River, Reeves,

Rusk, Sabine, San Augustine, San Jacinto, San Municipalities of Aguas Buenas, Aibonito, Arecibo, Patricio, San Saba, Schleicher, Scurry, Shackelford, Barranquitas, Canovanas, Carolina, Cayey, Ceiba, Shelby, Sherman, Smith, Somervell, Starr, Cidra, Coamo, Comerio, Corozal, Fajardo, Guayama, Stephens, Sterling, Stonewall, Sutton, Swisher, Gurabo, Juncos, Las Piedras, Loiza, Luquillo, Tarrant, Taylor, Terrell, Terry, Throckmorton, Titus, Tom Naguabo, Naranjito, Orocovis, Ponce, Rio Grande, Green, Travis, Trinity, Tyler, Upshur, Upton, Uvalde, Salinas, San Juan, Santa Isabel, Trujillo Alto, and Val Verde, Van Zandt, Victoria, Walker, Waller, Ward, Villalba. Washington, Webb, Wharton, Wheeler, Wichita, Wilbarger, Willacy, Williamson, Wilson, Winkler, United States Virgin Islands Wise, Wood, Yoakum, Young, Zapata, and Zavala. Islands of Saint Croix, Saint John, and Saint

Utah

Counties of Beaver, Box Elder, Cache, Carbon, Daggett, Davis, Duchesne, Emery, Garfield, Grand, Iron, Juab, Kane, Millard, Morgan, Piute, Rich, Salt Lake, San Juan, Sanpete, Sevier, Summit, Tooele, Uintah, Utah, Wasatch, Washington, Wayne, and Weber.