I have a rancher that sold all his livestock because of drought. How do I defer the gain in Pro Connect? The livestock are on the deprecation schedule.

[dlmayocpa]

The gain shows up on Form 4797 page 2 when I input the disposition on the depreciation page.  Is this an off the return tracking?  How do I stop the depreciation on the sold assets if it is off the return?

[George4Tacks]

You need to refer to all of the IRS information for the specifics of how to defer. I believe you should just input the date of sale, but no sales price. That stops depreciation and removes the assets from the depreciation in the future. You will be able to see the accumulated depreciation on the depreciation schedule and use that to compute the deferral. 

You can then do whatever attachment is necessary to show the deferral. I have no expertise there and have not read beyond this page https://www.irs.gov/newsroom/irs-drought-stricken-farmers-and-ranchers-have-more-time-to-replace-liv...

[dlmayocpa]

Thanks.  That is what I was considering, but wanted to see if anyone else had experienced the same situation.

[George4Tacks]

I believe this to be an IRC 1033 Conversion. I have done this for real property, but never livestock. 

https://www.journalofaccountancy.com/issues/2002/sep/thetimingofsection1033elections.html 

https://www.exeterco.com/1033_exchange_FAQs#how

may help

[dlmayocpa]

George, you have been most helpful.  Now the next question is how do I record the gain in the year of replacement of the livestock in ProConnect?

[George4Tacks]

I am unsure of your question. Did you look at the chart at the end of the Journal article? If you think there will be gain, then reporting it now and amending later may be the preferred method.