House Passes Tax Help for Drought-Impacted Ranchers

In a victory for ranchers and other drought-impacted livestock producers, the House passed today the American Jobs Creation Act of 2004 (H.R. 4520).  The legislation includes the long-supported “Rancher Help Act” provision, which allows for the extended deferral of capital gains tax from drought-related sales of livestock. 

“This is a huge boost for cattlemen in states suffering from ongoing drought,” says Bryan Dierlam, director of legislative affairs, National Cattlemen’s Beef Association (NCBA). “We have worked for years on this, and we thank Rep. Scott McInnis (R-CO) and Sen. Craig Thomas (R-WY) for seeing the Rancher HELP provision remains a priority in Congress.”

Under current tax laws, ranchers forced to reduce their herds due to historically-dry grazing lands are exempt from paying capital gains tax if they replace their herds within two years.  This legislation will increase that timeframe to four years.  With many regions seeing year after year of drought, this offers help for cattlemen trying to save their livelihood during long-term, unexpected, dry conditions.

“When Washington is above average on rainfall, as they are this year, this can be a difficult story to tell,” says Dierlam.  “But the truth is, many parts of the West are still terribly dry, and drought continues to cause distress for cattle operations across the country.  The members of Congress supporting this bill understand how these changes can help.”

Another provision in the bill would give a tax credit to livestock producers, including cattle producers, who produce electricity from renewable resources like livestock waste nutrients.  The credit is in the amount of 1.8 cents per kilowatt hour of electricity produced.  This gives an opportunity for producers to turn bottom-line expenses into a profit.  In the past, anaerobic digesters have largely been used to create the electricity, but this technology is not required.

NCBA will continue to push for final passage of these important tax code changes for cattle producers.