1. Assistance: Flood of 2019
Scott Clawson
Area Ag Econ Specialist

2. What to cover… Farm Service Agency assistance
LIP
ELAP
ECP
Tax implications of assistance
Disclaimer… Your discussions with your tax advisor or FSA rep supersedes anything I say

3. FSA Assistance Livestock Indemnity Program (LIP)
Provide benefits to … for livestock owners…for livestock deaths in excess of normal mortality… or reduced sale prices… caused by eligible loss conditions.
Eligibility
Died in excess of normal mortality of an eligible loss condition, i.e. flood
Commercial use

4. FSA Assistance Livestock Indemnity Program (LIP), cont.
Beef Payment Rates (75% adj. included)
Type
Weight Range
2019 Pmt. Rate
Adult
Cows
$916.87
Bulls
$1,191.93
Non Adult
800 +
$969.18
$661.19
399 -
$471.80
Beef Cattle Mortality Rates (2018)
Type
Weight Range
Mortality Rate
Adult
Cows / Bulls
1.5%
Non Adult
800 + 1% 2%
399 - 5%

5. $91,311.70 LIP Payment FSA Assistance
Livestock Indemnity Program (LIP), cont.
Payment Calculation
100 cows lost * 1.5% (mortality adj.) = 98.5 Head
98.5 head * $ (cow rate) =
$91, LIP Payment

6. FSA Assistance Livestock Indemnity Program (LIP), cont.
What you have to do…
Notice of loss in 30 days
Submit an application within 60 days of the calendar year in which the eligible loss condition occurred (2/29/20, yes it’s a leap year)
Document the loss
Proof of death + inventory records
Also a sales of injured livestock caveat

7. FSA Assistance
Emergency Assistance for Livestock, Honeybees and Farm Raised Fish (ELAP)
Feed/forage assistance
Similar to LFP from 2014, but LFP is only for drought/fire
FLOOD is an approved disaster for ELAP
No death loss

8. $0.978 daily livestock payment/hd
FSA Assistance
Emergency Assistance for Livestock, Honeybees and Farm Raised Fish (ELAP), cont.
Loss of forage
Loss of stored hay/feed
Feed cost associated with displaced livestock due to flood
$0.978 daily livestock payment/hd

9. FSA Assistance Emergency Conservation Program (ECP)
Need to verify with county/can’t start repairs!!!!
Rehabilitation program for damages natural disasters
Cost share program
Farming/ranching land included
Debris removal
Restoring conservation structures
Grading/leveling land
Providing water
Fencing

10. What about taxes? Example 1: Tractor Purchased 4 years ago for $80,000
Casualty: damage, destruction or loss of property resulting from an identifiable event that is sudden, unexpected or unusual.
Example 1:
Tractor Purchased 4 years ago for $80,000
NO INSURANCE
Depreciated $60,000 of the $80,000
FMV before flood $65,000, $0 afterward
Tax basis at flood was $20,000 ($80k-$60k)
Decline in FMV was $65,000
Deductible Loss is lesser of decrease in FMV and adjusted basis; DEDUCTION IS $20,000

11. What about taxes? Example 2: (SAME AS EX. 1 BUT W/ INSURANCE)
Tractor Purchased 4 years ago for $80,000
INSURED
Depreciated $60,000 of the $80,000
FMV before flood $65,000, $0 afterward
Tax basis at flood was $20,000 ($80k-$60k)
Insurance paid $70,000
Taxable gain is $50,000 (70k-20k)
UNLESS… you go buy another tractor

12. What about taxes? Example 3: Repair work to a shop/shed
If repairs cost $15,000, deductible loss is $15,000
If it is insured and you receive a check for $10,000, then your deductible loss is $5,000.
If your insurance check is $20,000, Uncle Sam wants his $5,000

13. What about taxes? Example 4: Fencing…completely depreciated, $0 basis
No deductible loss… (not even grazing losses)
Can depreciate new fencing per depreciation rules
If you get ECP cost share?
$10,000 in fence costs, ECP provides $4,000
ECP portion is not taxable, but basis on fence is $6,000.

14. What about taxes? Example 5: Raised breeding livestock
LIP: 1031 Exchange if replacing cows…
Example 5:
Raised breeding livestock
All costs of raising the livestock has already been deducted as operating expenses on Sch. F
No casualty loss to deduct
Purchased cows that have been fully depreciated are treated the same.
If they are not fully depreciated then the remaining basis can be deducted as a casualty loss

15. Questions?