of income.............rather, it treats the sale of livestock due to specified reasons as casualty losses........involuntary conversions.

The "deferral" comes from the time period for replacing the converted property..........so, no conversion into like property---------no deferral of income. 

You need to check and make sure, but I don't recall that the sale of livestock gets the same treatment as the deferral of the recognition of crop ins if such crop ins causes a distortion of the usual receipts pattern of the grain sales.

In any event............I recall that there is something about the proceeds from the involuntary conversion..........if from livestock under certain conditions......... can be put into NON livestock items, and get the involuntary treatment---------ie effectively get a basis reduction of the newly acquired replacement property.

If the proceeds are not plowed back into that which is allowed as "replacement property" under the Code, I would be concerned that you need to file amended returns for the year of conversion, and pick up the income there.

However........if you're still in farming.........again, you need to check this, since I have not read this/had this case for years..........as I recall you can reduce basis of replacement property...........and there is a very liberal definition of "replacement property"--------probably to the extent that you merely will not have as many expenses in the year of replacement.

Again.........as I recall.........there is an expanded period to allow for replacement.

Check IRS website for publications on involuntary conversions, if you are doing this yourself----------else, drop it into the lap of a pro.

I suspect the tax handling of the proceeds would be the same in the year of replacement as it would have been in year of conversion.........capital for capital, ordinary for ordinary.