Saturday, January 27, 2001
Steamboat Springs Ranchers who sold livestock before winter to avoid buying relatively high-priced hay for their animals can receive some federal income-tax relief.
Routt County was declared a disaster area because of a drought last year that reduced hay yields. That means ranchers are able to postpone showing income on extra livestock sold in 2000 until 2001 or 2002, depending on certain circumstances.
Then-Secretary of Agriculture Dan Glickman officially declared Routt County and nine other Colorado counties disaster areas in the fall. The counties had to have at least a 40-percent loss in pasture or hay to receive the disaster designation, said Valeen Jacobs, lead program technician for the Farm Service Agency in Routt County.
Jacobs wrote a letter to the state Farm Service Agency requesting the disaster designation. In addition to being 40 percent below normal during the growing season, between May and August, hay growers were hurt by winter weather, too.
"The snowpack was well below normal and we had no rain in the fall," Jacobs said.
In the fall, Routt County Extension Agent C.J. Mucklow estimated irrigated hay was 30 percent off its normal yield, while dry-land hay was anywhere from 40 to 100 percent off. That drove the price of horse hay up to $150 to $200, and lower-quality cattle hay was difficult to find.
To avoid paying the high cost of hay to feed livestock, some ranchers reported they were selling off larger-than-normal numbers of livestock before winter snows covered grazing land.
Thanks to the disaster designation, those ranchers do not have to show those gains on their 2000 federal tax return.
Income made on livestock sold above and beyond the average amount sold in an average year can be shown on 2001 returns, said Jeff Tranel, an agriculture and business management economist. For example, a rancher who normally sells 25 yearlings before the winter, but because of the high cost of hay sold 45 in 2000, can postpone showing income on the 20 extra animals until 2001.
That will allow the rancher to more accurately show annual incomes over a two-year period.
"Without postponing the extra income, it could jump you into a higher tax bracket," Tranel said.
Ranchers who sold off extra breeding stock because of the drought can postpone showing those gains until 2002.
But there's a condition. By 2002, the gain made in 2000 must be used to replace the extra breeding stock sold. If not, the rancher would have to amend the 2000 tax return to show the extra gain.
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