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Desktop: Form 4797 - Sale of Business Property

Form 4797, Sales of Business Property is used to report the following transactions:

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

In TaxSlayer Pro, how you include the sale of an asset in a tax return depends on whether or not you are using the depreciation module for the business:

  • If you are using the depreciation module in a business and the asset is listed there
    Indicate the asset has been disposed of in the asset's data entry window by selecting Disposition, entering the date, and indicating whether or not to carry the sale directly to Form 4797. (Answer Yes to the question about carrying the disposition to Form 4797 unless the asset was sold in a like-kind exchange or in an installment sale, or if it was lost due to casualty or theft and is being reported on Form 4684. See here for more information about this question.)

  • If you're not using the depreciation module
    If you're calculating depreciation outside of TaxSlayer Pro and making depreciation entries directly on Form 4562, you'll need to enter the sale information directly onto Form 4797. To enter the sale on Form 4797, 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 - Click New and enter six bits of information:
      • Description of Property
      • Date Acquired - Enter the date acquired.
      • Date Sold - Enter the date sold or disposed of.
      • Gross Sales Price
      • Cost or Other Basis
      • Depreciation Allowed - Enter the amount of depreciation taken.

After entering the above information, you will be asked what form part to carry the transaction to. See the chart below to help determine the correct form part. See here for a fuller explanation of Section 1245.

 

Type of Property Held 1 year
or less		 Held more
than 1 year
1 Depreciable tangible trade or business property:    
  a Sold or exchanged at a gain Part II Part III (1245)
  b Sold or exchanged at a loss Part II Part I
2 Depreciable real trade or business property:    
  a Sold or exchanged at a gain Part II Part III (1250)
  b Sold or exchanged at a loss Part II Part I
3 Farmland held less than 10 years upon which soil or water expenses were deducted    
  a Sold at a gain Part II Part III (1252)
  b Sold at a loss Part II Part I
4 Real or tangible trade or business property which was deducted under the de minimis safe harbor Part II Part II
5 All other farmland used in a trade or business Part II Part I
6 Disposition of cost-sharing payment property described in section 126: Part II Part III (1255)
7 Cattle and horses used in a trade or business for draft, breeding, dairy, or sporting purposes Held less than
24 months		 Held 24 months
or more
  a Sold at a gain Part II Part III (1245)
  a Sold at a loss Part II Part I
  c Raised cattle and horses sold at a gain Part II Part I
8 Livestock other than cattle and horses used in a trade or business for draft, breeding, dairy, or sporting purposes Held less than
12 months		 Held 12 months
or more
  a Sold at a gain Part II Part III (1245)
  b Sold at a loss Part II Part I
  c Raised livestock sold at a gain Part II Part I
9 Oil, gas, or geothermal property Part III (1254)

 

Note: This is a brief guide on entering information about the disposition of business property in Form 4797 in TaxSlayer Pro. This is not intended as tax advice.

Additional Information:

IRS: Instructions for Form 4797 - Sale of Business Property

IRS: Publication 537 - Installment Sales

IRS: Instructions for Form 8824 - Like-Kind Exchanges

IRS: Instructions for Form 6252 - Installment Sales