Washington, DC —
Today, Senator John Thune co-signed a letter calling on U.S. Treasury Secretary Paulson to extend a capital gains tax deferment for livestock producers who were forced to sell portions of their herd as a result of drought conditions in 2002.
"Extending the capital gains deferment for livestock producers in South Dakota and across the country is a common-sense solution that would provide much needed relief as we are once again facing devastating drought conditions," said Thune. "I will continue to press the importance of getting needed relief to farmers and ranchers suffering from these historic drought conditions."
Excerpts from the letter:
As our country is being hit by a harrowing heat wave, our producers continue to feel the impacts of a multi-year drought. We are writing today to request that the capital gains tax deferment period established under Section 1033(e) of the Internal Revenue Code be extended for those livestock producers who were forced to sell off large portions of their draft, breeding or dairy stock as a result of egregious drought conditions in 2002.
In recognition of the extreme drought conditions faced by many producers, Congress, in 2004, amended Section 1033(e) to extend the tax deferment period for weather-related sales of livestock -known as involuntary conversions -from two to four years. The amendment also included a provision giving the Secretary of the Treasury the authority to further extend this deferment period for such additional time as the Secretary determines appropriate. Although producers welcomed the extension and hoped they would be able to replenish their herds by 2006, many portions of the regions most severely impacted by the drought in 2002 remain classified as "extreme" or "exceptional" drought areas, as determined by the U.S. Drought Monitor.
Persisting drought conditions have left forage sources unfortunately scarce, and it is currently not in the best interest of livestock producers to replace livestock. However, these producers would be required to purchase replacement animals to avoid realizing the gain from their 2002 weather related livestock sales. As such, an appropriate extension of the capital gains tax deferment period would allow producers to re-invest at a more reasonable and opportune time and help them avoid suffering further losses due to uncontrollable drought conditions.
"Extending the capital gains deferment for livestock producers in South Dakota and across the country is a common-sense solution that would provide much needed relief as we are once again facing devastating drought conditions," said Thune. "I will continue to press the importance of getting needed relief to farmers and ranchers suffering from these historic drought conditions."
Excerpts from the letter:
As our country is being hit by a harrowing heat wave, our producers continue to feel the impacts of a multi-year drought. We are writing today to request that the capital gains tax deferment period established under Section 1033(e) of the Internal Revenue Code be extended for those livestock producers who were forced to sell off large portions of their draft, breeding or dairy stock as a result of egregious drought conditions in 2002.
In recognition of the extreme drought conditions faced by many producers, Congress, in 2004, amended Section 1033(e) to extend the tax deferment period for weather-related sales of livestock -known as involuntary conversions -from two to four years. The amendment also included a provision giving the Secretary of the Treasury the authority to further extend this deferment period for such additional time as the Secretary determines appropriate. Although producers welcomed the extension and hoped they would be able to replenish their herds by 2006, many portions of the regions most severely impacted by the drought in 2002 remain classified as "extreme" or "exceptional" drought areas, as determined by the U.S. Drought Monitor.
Persisting drought conditions have left forage sources unfortunately scarce, and it is currently not in the best interest of livestock producers to replace livestock. However, these producers would be required to purchase replacement animals to avoid realizing the gain from their 2002 weather related livestock sales. As such, an appropriate extension of the capital gains tax deferment period would allow producers to re-invest at a more reasonable and opportune time and help them avoid suffering further losses due to uncontrollable drought conditions.