Form 4797 is used to report the sale or exchange of these kinds of business property:
- Real property
- Depreciable tangible property
- Amortizable tangible property
- Oil, gas, geothermal, and mineral properties
- Section 126 property
It is also used to report these kinds of transactions:
- the involuntary conversion (other than due to theft or casualty) of property that was used in trade or business and also capital assets held for more than one year;
- disposition of capital assets that aren't on Schedule D;
- disposition of noncapital assets other than inventory;
- gain or loss for partners and S corp shareholders of section 179 property dispositions by those entities;
- computation of section 179 and section 280F(b)(2) recapture amounts when the business use of section 179 or listed property decreases to 50% or less;
- gains or losses treated as ordinary by a securities or commodities markets trader when a mark-to-market election is made under section 475(f);
To access Form 4797 in the individual income tax return in TaxSlayer Pro, from the Main Menu of the tax return (Form 1040) select:
- Income
- Other Gains/Loss (4797, 8824)
- Form 4797 - Sales of Business Property
- Enter/Edit 4797 Transactions - Enter information about property dispositions here.
- Other Data - There are a few additional lines on Form 4797 that need direct entry, and these are accessed under the Other Data menu as follows:
Nonrecaptured Net Section 1231 Losses
- Nonrecaptured Net Sec. 1231 Losses from Prior Years - Nonrecaptured section 1231 losses are the net section 1231 losses deducted during the five preceding tax years that haven't yet been applied against net section 1231 gain to determine how much net section 1231 gain is treated as ordinary income. Follow the Form 4797 instructions to determine what amount, if any, to enter here.
Section 179 and Section 280F(b)(2) recapture amounts when business use drops to 50% or less
For property placed in service after 1986, and for listed property placed in service in a prior year, if the business use of the property has decreased to 50% or less this year, the section 179 expense deduction and/or excess depreciation will need to be recaptured. The recapture amount is calculated separately for each property, so if there are multiple properties subject to recapture rules, the calculations will need to be shown on a statement attached to the return. All the following amounts will carry to lines 33 and 34 of Part IV of Form 4797.
- Section 179 or Depreciation Allowable in Prior Years (line 33 column (a)) - The section 179 expense deduction claimed when the property was placed in service;
- Recomputed Depreciation Under Section 179 (line 34 column (a)) - The depreciation that would have been allowable on the section 179 property from the first year through the current year;
- Section 179 or Depreciation Allowable Under Sec 280F(b)(2) (line 33 column (b)) - The amount in column (a) plus the depreciation allowable on the property in the prior tax years;
- Recomputed Depreciation Under Sec 280F(b)(2) (line 34 column (b)) - The depreciation that would have been allowable if the property hadn't been used more than 50% in a qualified business, figured from the first year through the prior year.
Note that the recapture amount on line 35 of Form 4797, calculated using the above entries, needs to be added to the basis of the property(ies).
Gross Proceeds from Forms 1099-B and 1099-S
- Gross Proceeds from Sale of Real Estate - Enter on this line (a) the gross proceeds reported on Form(s) 1099-S, and (b) ordinary gains and losses reported on Form 1099-B if the taxpayer is a securities and commodities trader with a mark-to-market election under section 475(f) in effect for the tax year.
Partial Dispositions of MACRS Assets
- Total Gain from Partial Dispositions of MACRS Assets - Enter the total gain from partially disposed assets being reported on Form 4797 on lines 2, 10, and 24.
- Total Loss from Partial Dispositions of MACRS Assets - Enter the total loss from partially disposed assets being reported on Form 4797 on lines 2 and 10.
Additional Information: