Each year the IRS releases a list of those counties affected by drought in the US. This list is used by ranchers to determine if they have an additional year to defer the gain from selling excess livestock due to drought. Section 1033 allows ranchers a four-year period to reinvest proceeds from the sale of livestock due to drought into new replacement livestock. This four-year period can be extended an additional year if the county the taxpayer resides or operates in or any adjacent county is declared to be in a drought condition. This additional year can be extended for every consecutive year the county is in the drought condition.
In IRS Notice 2013-62, the IRS has listed those counties for this year. Many of these counties have been on the list since the start of this process several years ago. In reviewing the list, it appears that almost every county in Texas is listed, whereas there are no counties in Washington state.
Ranchers would rather not have to sell livestock due to drought, but at least the tax laws provide some help in those situations.