Tax Provisions for Cattlemen Extended

Washington, D.C. (October 8, 2004) – Cattlemen scored a long-awaited victory in the U.S. House last night with passage of the conference report on the American Jobs Creation Act (H.R. 4520), which contains a number of provisions important for cattlemen.

“The National Cattlemen’s Beef Association (NCBA) has been working for years on these common-sense tax measures which will help producers and small business operators,” says Bryan Dierlam, NCBA director of legislative affairs. 

Included in H.R. 4520 is the Rancher Help Act, which extends from two years to four years the amount of time cattle producers have to reinvest in livestock without paying capital gains taxes on cattle sold due to drought or another natural disaster. The bill also extends Section 179 expensing and allows cattle producers to write off equipment purchases in the year of purchase without having to depreciate the expense over time.

“These two provisions will help cattle producers who need to make equipment purchases, and help them to better manage cash flow on livestock sold due to drought and then re-purchased when conditions improve,” says Dierlam. 

The legislation also corrects portions of the U.S. tax code that led the European Union to place high and ever increasing tariffs on U.S. exports due the U.S.’s current treatment of Foreign Sales Corporation (FSC) and Extra-Territorial Income (ETI), widely referred to as FSC/ETI.  This bill should resolve this outstanding World Trade Organization dispute and remove tariffs from many U.S exports. 

The Conference Report must now be voted on in the Senate, and NCBA is hopeful the measure will pass before adjournment this weekend.  Following passage in the Senate, the bill will go to President Bush for his signature. 

When the bill becomes law, producers are encouraged to contact their tax advisers to learn how to take advantage of these new rules.