Last Updated : January 14, 2009
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4797

Form 4797

Sale of Business Property

Purpose of the form
Use this form to report:

  • The sale or exchange of :Property used in your trade or business
  • Depreciable and amortizable property
  • Oil, gas, geothermal , or other mineral properties and
  • Section 126 property.
  • The involuntary conversion 9 from other than casualty or theft) of property used in your trade or business and capital assets held in connection with a trade or business or a transaction entered into for profit.
  • The disposition of capital assets not reported on schedule D.
  • The gain or loss 9 including any recapture) for partners and S corporations shareholders from certain section 179 property dispositions by partnerships (other than electing large partnerships) and S corporations.
  • The computation of recapture amounts under section 179 and 280F(b)(2) when the business use of section 179 or listed property decreases to 50% or less.

 OTHER FORMS TO USE:

  • Use form 4684, Casualty and Thefts to report involuntary conversions from casualties and thefts.
  • Use form 6252, Installment sale income, to report the sale of property under the installment method.
  • Use form 8824, Link-Kind exchanges, to report exchanges of Qualifying Business or investment property for property of a like kind.

PART –I:
Use part-I to report section 1231 transactions that are not required to be reported in
Part-III. Refer IRS instructions for examples of section 1231 transactions.

Enter the description of the property, date acquired, date sold, sales price, depreciation allowed, and cost or other basis in columns (a) to (f). the package calculates the gain or loss in column (g).

PART –II:
If  a transaction is not reportable in Part –I or Part-III and the property is not a capital asset reportable on Schedule D, report the transaction in Part-II.
For more details, refer publication 541.

PART –III:
Generally, for property held for 1 year or less, do not complete Part-III, Instead use Part-II. Use Part-III to figure recapture of depreciation and certain other items that must be reported as ordinary income on the disposition of property. Complete lines 19 through 24 to determine the gain on the disposition of the property.
For more details, refer publication 544.

PART –IV:
Column (a) of Part-IV is used to recapture depreciation a section 179 deduction for property placed in service after 1986, if the business use percentage fell to 50% or below.

Column (b) of Part-IV is used to recapture depreciation for any listed property placed in service in a prior year, if the business use percentage fell to 50% or below.

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