4797 Instructions 2023 - 2024

Form 4797 – Sales of Business Property is the tax form used for reporting the sale of business property. Form 4797 is also used for reporting any exchange of business property. Since Form 4979 reports the sale or exchange of business property, the filer must provide the listed information below.

  • Property description
  • Purchase date
  • Sale or exchange date
  • Gross sale price
  • Cost of purchase
  • Depreciation amount

Content of Form 4797

Form 4797 is made up of four separate parts. Which part of Form 4979 you’ll use depends on the kind of property and your gain or loss. If the property was held for more than a year, Part 1: Sales or Exchanges of Property Used in a Trade or Business and Involuntary Conversions From Other Than Casualty or Theft needs to be used. This first part of Form 4979 also indicates that most property held more than one year needs to be reported in Part 1.

A property held for a year or less and sold for loss is reported on Part 2, Ordinary Gains and Losses.

A capital asset held for more than a year and sold for profit is reported on Part 3, Gain From Disposition of Property.

The last part of Form 4797, Part 4; recapture amounts under sections 179 and 280F(b)(2) when business use drops to 50% or less, is used for recapturing the amounts when the business use of a property is reduced by half or less.

After Form 4797 is filed, it can then be attached to the federal income tax return. Although Form 4797 can seem complicated at first, we suggest taking your time to understand why you’re filing a 4797 in the first place. This will enable you to file Form 4797 with ease without the need for tax preparation software.

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