There were many ranchers who did sell last year. A study of the drought's effects on the state's beef cattle industry done by the University of Arkansas System Division of Agriculture (See: http://srmec.uark.edu/beef/) found that 49 percent had sold more mature cows than in a typical year and 41 percent sold more heifers.
"These early sales may have been caused by shortage of water, poor grazing conditions, low feed production, or other consequences of weather-related conditions," said Nathan Kemper, trade adjustment assistance coordinator for the Southern Risk Management Education Center.
Kemper said there are two tax options available to livestock producers and the producers must meet all of the following conditions to qualify for either option:
- You use the cash method of accounting.
- You can show that, under your usual business practices, you would not have sold or exchanged the additional animals this year except for the weather-related condition.
- The weather-related condition caused an area to be designated as eligible for assistance by the federal government.
Kemper strongly advised that ranchers contact their CPA or tax specialist on their options and should refer to the IRS Farmers' Tax Guide for 2012 returns: www.irs.gov/pub/irs-pdf/p225.pdf.