Drought Sale


DEFINITION of 'Drought Sale'

When a farmer is forced to sell more animals than in a typical year because of poor weather conditions. The profits from the livestock sales can be deferred to the following year, even if the proceeds exceed the losses.

BREAKING DOWN 'Drought Sale'

The tax deferral is not exclusive to a drought situation. Losses due to unexpected epidemic (disease outbreak) ravaging the livestock or other uncharacteristically massive losses (floods, fires, etc).

  1. Recognized Gain

    When an investment or asset is sold for an amount that is greater ...
  2. Net Proceeds

    The amount received by the seller after all costs and expenses ...
  3. Deferred Account

    An account that postpones tax liabilities until a future date. ...
  4. Bankruptcy

    A legal proceeding involving a person or business that is unable ...
  5. Recognized Loss

    When an investment or asset is sold for less than its purchase ...
  6. Deferred Income Tax

    A liability recorded on the balance sheet that results from income ...
Related Articles
  1. Retirement

    Tax Tips For The Individual Investor

    We give you seven guidelines to help you keep more of your money in your pocket.
  2. Entrepreneurship

    Tax Credit For Plan Expenses Incurred By Small Businesses

    Determine whether your business is eligible to claim a tax credit for establishing a retirement plan.
  3. Taxes

    10 Money-Saving Year-End Tax Tips

    Getting organized well before the deadline will curb your frustration and your tax liability.
  4. Investing

    The Quinoa Quandary for Bolivian Farmers

    Growing global demand for quinoa has impacted Bolivian farmers' way of life. Should the American consumer be wary of buying this product?
  5. Investing Basics

    Why You Should Invest Like a Pig Farmer

    Want to increase your long term returns? Consider buying stocks like a farmer, not like a trader.
  6. Economics

    Looking to Invest In Ukraine? Here is How

    We examine a number of ways to invest in Ukraine, including ETFs, managed funds, corporate investments, and Eurobonds.
  7. Economics

    How To Invest In Farming Without Owning a Farm

    Investors have a number of ways to get exposure to the agriculture and farming sector besides actually having to buy a farm.
  8. Savings

    Why Organic Food Is So Expensive

    Discover how organic farmers face many obstacles. Learn why your organics cost so much more than conventional foods and if there is any hope for falling prices.
  9. Economics

    These Companies Are Poised for Growth as Global Population Growth Comes Online

    While there are many concerns about population growth putting pressure on natural resources such as water and energy, these increased demands can spell profits for certain companies that can ...
  10. Investing News

    Could the World Run Out of Chocolate?

    Chocolate lovers, beware! Is it time to start stockpiling your favorite brands?
  1. What countries are driving most of the growth of the food and beverage sector?

    The countries driving most of the growth of the food and beverage sector are the primary emerging market economies of China ... Read Full Answer >>
  2. What is the point of agricultural subsidies?

    Every five years, new legislation is introduced and passed through the U.S. Congress to subsidize farmers and agricultural ... Read Full Answer >>
  3. What are tradable commodities?

    Tradable commodities consist of basic goods used in commerce that are often interchangeable with other goods of the same ... Read Full Answer >>
  4. What country produces the most coffee?

    According to the 2014-2015 forecast provided by the U.S. Department of Agriculture's Foreign Agriculture Service, Brazil ... Read Full Answer >>
  5. What percentage of the global economy is comprised of the forest products sector?

    The forest products sector is comprised of companies that plant, grow, harvest, and process wood and wood-related products ... Read Full Answer >>
  6. How does scarcity affect global agriculture stocks?

    Agricultural products are a commodity and their prices are related to other commodities, particularly crude oil. Crops including ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Zero-Sum Game

    A situation in which one person’s gain is equivalent to another’s loss, so that the net change in wealth or benefit is zero. ...
  2. Capitalization Rate

    The rate of return on a real estate investment property based on the income that the property is expected to generate.
  3. Gross Profit

    A company's total revenue (equivalent to total sales) minus the cost of goods sold. Gross profit is the profit a company ...
  4. Revenue

    The amount of money that a company actually receives during a specific period, including discounts and deductions for returned ...
  5. Normal Profit

    An economic condition occurring when the difference between a firm’s total revenue and total cost is equal to zero.
  6. Operating Cost

    Expenses associated with the maintenance and administration of a business on a day-to-day basis.
Trading Center
You are using adblocking software

Want access to all of Investopedia? Add us to your “whitelist”
so you'll never miss a feature!