[Congressional Record Volume 141, Number 76 (Tuesday, May 9, 1995)]
[Extensions of Remarks]
[Pages E973-E974]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


    LEGISLATION AMENDING THE INTERNAL REVENUE CODE RELATING TO THE 
  TREATMENT OF LIVESTOCK SOLD ON ACCOUNT OF WEATHER-RELATED CONDITIONS

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                            HON. TIM JOHNSON

                            of south dakota

                    in the house of representatives

                          Tuesday, May 9, 1995
  Mr. JOHNSON of South Dakota. Mr. Speaker, I am pleased today to 
introduce legislation that would make our Tax Code fairer and more 
equitable for farmers and ranchers who are forced to sell their 
livestock prematurely on account of weather-related conditions.
  Our current Tax Code contains two provisions dealing with livestock 
sold because of drought conditions. One of these provisions allow 
producers to defer tax on any gain from these sales by reinvesting the 
proceeds in similar property within 2 years. The other provision 
permits producers who do not reinvest the proceeds from the sale in 
similar property to include these proceeds in their taxable income in 
the following year.
  While these provisions provide some assistance to producers who have 
experienced a drought, they do not apply to livestock sold on account 
of flooding. However, floods can be just as devastating to producers as 
drought conditions, and can cause the destruction of crops grown to 
feed livestock, damage to fences, and high losses of young stock. The 
heavy rains and flooding we have been experiencing in my State of South 
Dakota have caused calf losses as high as 40 percent in some areas.
  In addition, farmers who lose crops due to any natural disaster, 
including flooding, are able to benefit from certain provisions in the 
Tax Code. For example, farmers who receive insurance or disaster 
payments when their crops are lost or damaged due to severe weather 
conditions are often permitted to include these payments in the year 
following the disaster. Provisions such as this are designed to spread 
out the impact of taxes on farmers in these situations. I find it 
difficult to justify the fact that farmers who lose crops on account of 
flood conditions are covered by these provisions, while producers who 
are forced to sell livestock because of flooding are not.
  [[Page E974]] This legislation would broaden the existing provisions 
of the Tax Code regarding livestock, adding flooding and other weather-
related conditions to drought as conditions allowing the use of the 
special rules relating to proceeds from livestock sales. It would also 
result in more equitable treatment of crops and livestock relative to 
tax payments after disasters. However, it would not reduce the total 
amount of taxes paid by livestock producers who suffer disasters, but 
instead would merely delay the payment of taxes under these 
circumstances.
  Mr. Speaker, I am certain that you and the rest of my colleagues 
would agree that it is unfair to deny the disaster-related provisions 
of the Tax Code to livestock producers just because the disaster 
involved is a flood and not a drought. I ask you to join me in making 
this commonsense change to the Federal Tax Code, and provide some 
needed assistance to our Nation's livestock producers.


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