This section currently allows a four year deferment. Revenue from cattle sold in 2002 would need to be claimed in 2006.
"If granted, farmers and ranchers will be able to defer income from the sale of livestock for an additional two years, thus avoiding the gains tax, and retaining those funds to buy back livestock once the drought breaks," said Gov. Rounds.
In a letter to Henry M. Paulson, secretary of the Department of the Treasury, Gov. Rounds gave the details of South Dakota's prolonged drought and explained the significant impact of the current exceptional drought conditions on our agricultural industry. These conditions have forced farmers and ranchers to reduce their cattle and sheep herds.
Gov. Rounds wrote, "Many of our livestock producers were forced to liquidate their herds during the 2002 drought. They have been attempting to rebuild their herds over the past few years, but prolonged drought conditions have thwarted their efforts.
"To avoid penalizing producers who were forced to liquidate their herd in 2002 and have been unable to replace their losses due to drought, I request you consider granting a regional two-year extension to the time period for purchasing replacement livestock under IRC Section 1033."
The governor closed by explaining the two-year extension was necessary, even in the event that normal precipitation resumes.
, to allow pastures to replenish lost soil moisture and restore vegetation.