Drought bill would defer income tax for farmers and ranchers | PostIndependent.com

Drought bill would defer income tax for farmers and ranchers

A new bill that may come out of this week’s special session of the state legislature could give drought-stricken ranchers and farmers some tax relief.

The bill, HB02S-1010, would allow a rancher or farmer to defer paying income taxes on livestock sales during times of drought. The deferment will last up to four years after the end of the drought while a rancher regroups.

Rep. Brad Young, R-Lamar, will be the House sponsor for the bill. Young is the chairman of the Joint Budget Committee.

Sen. Jack Taylor, R-Steamboat Springs, will introduce it in the Senate.

“I see my constituents, my friends and my neighbors struggling in northwest Colorado because there isn’t sufficient water or grass to feed these animals,” Taylor said. “It’s a hard time to be a rancher or a farmer, and I’m just trying to make it a little easier until we get through the drought.”

Under the proposal, the state would calculate the historical average of sales from a given ranch, not including drought years, to determine the tax reduction.

In other words, whatever a rancher typically sells during non-drought years will not be a part of the deferment. If a rancher historically sells 50 cattle, but is forced to sell 150 because of the drought, the deferment will only apply to 100 cattle.

A federal law already in place defers income and capital gains taxes for 2002 payable in 2003.

The idea for the bill came from a Jackson County rancher struggling with this year’s drought, as are many ranchers around the state.

“Farmers and ranchers are the soul and history of rural Colorado,” Taylor said. “My constituent came to me for help, but I also realize that it’s not an isolated problem. A lot of agriculture people all across Colorado need this legislation.

“A cattle operator could be totally wiped out if he is forced by drought conditions to sell all his cattle, including his mother cows, in a bad market and then have to pay capital gains taxes as well.

“Some who feel we are in a tight budget may be opposed,” Taylor said, although he feels the bill will be revenue neutral.

The special session began Monday and will focus on a new death penalty statute, clarifying and strengthening penalties for those who intentionally start wildfires, and assisting ranchers and farmers during this time of record dry conditions.

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