Of the thrilling sights and sounds of the annual Navajo County Fair, few would argue that any are more entertaining for fans and spectators than the rodeos, open class animal shows and the livestock market auction.

Ironically, this season’s monsoon downpours yielded to a string of clear and sunny days that made fair week enjoyable for livestock buyers and showmen alike.

Adequate rainfall, though, has been problematic for much of this region for the past several years. According to the National Drought Mitigation Center’s (NDMC) latest U.S. Drought Monitor report Oct. 1, drought tendency estimates for Arizona between Sep. 17 and Dec. 31, 2015, indicate a possible drought removal by the end of this period.

For many Arizona farmers and ranchers, though, costly collateral damage has already been done, as some were previously forced to sell livestock due to drought. The U.S. Internal Revenue Service (IRS) granted a provision last week to assist those who face this issue.

The agency unveiled a notice Sept. 30, which outlines an extended period of time farmers and ranchers, who due to drought, sell more livestock for draft, breeding or dairy purposes than they normally would, may defer tax on the extra gains from the forced sales.

Andrew Braden of the IRS Office of Associate Chief Counsel (Income Tax & Accounting) explained, “The drought notice is a recurring notice distributed every year since 2006. The policy behind it is that the original statutes that lay out the qualifications for drought don’t always fairly represent the situation for people who live in areas of severe drought. Two years may not be enough time to replace a whole herd. That is the purpose of adding the extra year for these circumstances.”

The notice stipulates that to qualify, the livestock generally must be replaced within a four-year period. Poultry are not listed as eligible.

The IRS provision applies to any farm or ranch located in a county, parish, city, borough, census area or district listed as suffering exceptional, extreme or severe drought conditions by the NDMC during any weekly period between Sept. 1, 2014, and Aug. 31, 2015. All or part of 48 states and Puerto Rico are listed.

The notice lists all 15 Arizona counties as NDMC-designated counties.

This means that farmers and ranchers in these areas whose drought sale replacement period was scheduled to expire at the end of this tax year, Dec. 31, 2015, will in most cases have until the end of the next tax year as the deadline. The normal four-year drought sale replacement period places this extension to immediately impact drought sales that occurred during 2011.

Steve Gouker of the Navajo County Junior Livestock Commission says the local drought did not seem to adversely affect sales at last month’s county livestock auction. “Our total sales were about where they normally have been, around $120,000. We were down on steers this year, but we had more hogs and more lambs,” he related.

For full details on the IRS Notice 2015-69 relief provision, visit http://www.irs.gov/pub/irs-drop/n-15-69.pdf. For details on drought sales reporting and other farm-related tax issues, visit http://www.irs.gov/uac/About-Publication-225.