טופס 4797 הוראות
הוראות טופס 4797, מכירות של נכסים עסקיים (התוצאות הבלתי רצוניות וההפצה של סעיפים 179 ו-280F(b)(2))
2023
טפסים קשורים
- טופס 4797 - מכירת הנכס העסקי (התוצאות הבלתי רצוניות וההפצה של סעיפים 179 ו-280F(b)(2))
Department of the Treasury
Internal Revenue Service
2023
Instructions for Form 4797
Sales of Business Property
(Also Involuntary Conversions and Recapture Amounts
Under Sections 179 and 280F(b)(2))
Section references are to the Internal Revenue Code
unless otherwise noted.
2. Depreciable and amortizable tangible property used
in your trade or business (however, see Disposition of
later);
Future Developments
For the latest information about developments related to
Form 4797 and its instructions, such as legislation
enacted after they were published, go to IRS.gov/
3. Oil, gas, geothermal, or other mineral properties;
and
4. Section 126 property.
The involuntary conversion (from other than casualty or
•
theft) of property used in your trade or business and
capital assets held for more than 1 year in connection with
a trade or business or a transaction entered into for profit
(however, see Disposition of Depreciable Property Not
General Instructions
Purpose of Form
The disposition of noncapital assets (other than
Use Form 4797 to report the following.
•
inventory or property held primarily for sale to customers
in the ordinary course of your trade or business).
The sale or exchange of:
1. Real property used in your trade or business;
•
Where To Make First Entry for Certain Items
Reported on This Form
(b)
Held 1 year
or less
(c)
(a)
Held more
than 1 year
Type of property
1
2
3
Depreciable tangible trade or business property:
a
b
Sold or exchanged at a gain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sold or exchanged at a loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Part II
Part II
Part III (1245)
Part I
Depreciable real trade or business property:
a
b
Sold or exchanged at a gain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sold or exchanged at a loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Part II
Part II
Part III (1250)
Part I
Farmland held less than 10 years upon which soil or water expenses were
deducted:
a
b
Sold at a gain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sold at a loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Part II
Part II
Part III (1252)
Part I
4
Real or tangible trade or business property which was deducted under the
de minimis safe harbor
Part II
Part II
5
6
All other farmland used in a trade or business
Disposition of cost-sharing payment property described in section 126
Part II
Part II
Part I
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
b
c
Sold at a gain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sold at a loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Raised cattle and horses sold at a gain . . . . . . . . . . . . . . . . . . . . . . . . .
Part II
Part II
Part II
Part III (1245)
Part I
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
b
c
Sold at a gain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Sold at a loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Raised livestock sold at a gain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Part II
Part II
Part II
Part III (1245)
Part I
Part I
Jan 9, 2024
Cat. No. 13087T
The disposition of capital assets not reported on
amount realized between the two types of property based
on their respective fair market values (FMVs) to figure the
part of the gain to be recaptured as ordinary income
because of depreciation. The disposition of each type of
property is reported separately in the appropriate part of
Form 4797. For example, for property held more than 1
year, report the sale of a building in Part III and the land in
Part I.
•
Schedule D.
The gain or loss (including any related recapture) for
•
partners and S corporation shareholders from certain
section 179 property dispositions by 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.
Disposition of Depreciable Property Not Used in
Trade or Business
Gains or losses treated as ordinary gains or losses, if
•
you are a trader in securities or commodities and made a
mark-to-market election under section 475(f).
Generally, gain from the sale or exchange of depreciable
property not used in a trade or business but held for
investment or for use in a not-for-profit activity is capital
gain. Generally, the gain is reported on Form 8949 and
Schedule D. However, part of the gain on the sale or
exchange of the depreciable property may have to be
recaptured as ordinary income on Form 4797. Use Part III
of Form 4797 to figure the amount of ordinary income
recapture. The recapture amount is included on line 31
(and line 13) of Form 4797. See the instructions for Part III.
If the total gain for the depreciable property is more than
the recapture amount, the excess is reported on Form
8949. On Form 8949, enter “From Form 4797” in column
(a) of Part I (if the transaction is short term) or Part II (if the
transaction is long term), and skip columns (b) and (c). In
column (d), enter the excess of the total gain over the
recapture amount. Leave columns (e) through (g) blank
and complete column (h). If you invested this gain into a
QOF and intend to elect the temporary deferral of the
gain, see the Instructions for Form 8949; Form 8997, Initial
and Annual Statement of Qualified Opportunity Fund
(QOF) Investments, and its instructions; and the
Election to defer a qualified section 1231 gain (gains
•
derived from the sale of property used in a trade or
business) invested in a qualified opportunity fund (QOF).
Other Forms You May Have To File
Use Form 4684, to report involuntary conversions from
•
casualties and thefts.
Use Form 6252, to report the sale of property under the
•
installment method.
Use Form 8824, to report exchanges of qualifying
•
business or investment real property for real property of a
like kind. For exchanges of real property used in a trade or
business (and other noncapital assets), enter the gain or
(loss) from Form 8824, if any, on Form 4797, line 5 or
line 16.
If you sold property on which you claimed investment
•
credit, see Form 4255, and its instructions to find out if you
must recapture some or all of the credit.
Use Form 8949, to report the sale or exchange of
•
capital assets not reported on another form or schedule;
gains from involuntary conversions (other than casualty or
theft) of capital assets not used in your trade or business;
and nonbusiness bad debts. However, see Disposition of
later.
instructions for the applicable Schedule D.
Generally, loss from the sale or exchange of
depreciable property not used in a trade or business but
held for investment or for use in a not-for-profit activity is a
capital loss. Report the loss on Form 8949 in Part I (if the
transaction is short term) or Part II (if the transaction is
long term). You can deduct capital losses up to the
amount of your capital gains. In the case of taxpayers
other than corporations, you can also deduct the lower of
$3,000 ($1,500 if you are a married individual filing a
separate return), or the excess of such losses over such
gains. See the Instructions for Form 8949 and the
Instructions for Schedule D (Form 1040).
Use the applicable Schedule D, Capital Gains and
•
Losses, for the return you are filing to figure the overall
gain or loss from transactions reported on Form 8949 and
to report transactions you don’t have to report on Form
8949. See the Instructions for Form 8949 and the
instructions for the applicable Schedule D.
Additional information. See the instructions for the
forms listed above for more information. Also see Pub.
544, Sales and Other Dispositions of Assets, and Pub.
550, Investment Income and Expenses.
Partial Dispositions of MACRS Property
Special Rules
At-Risk Rules
If you report a loss on an asset used in an activity for
which you are not at risk, in whole or in part, see the
Instructions for Form 6198. Also, see Pub. 925, Passive
Activity and At-Risk Rules. Losses from passive activities
are subject first to the at-risk rules and then to the passive
activity rules.
You may elect to recognize a partial disposition of a
Modified Accelerated Cost Recovery System (MACRS)
asset, and report the gain, loss, or other deduction on a
timely filed, including extensions, federal tax return for the
year of the disposition. In some cases, however, you are
required to report the gain or loss on the partial disposition
later). MACRS assets include buildings (and their
structural components) and other tangible depreciable
property placed in service after 1986 that is used in a
trade or business or for the production of income.
Depreciable Property and Other Property
Disposed of in the Same Transaction
If you disposed of both depreciable property and other
property (for example, a building and land) in the same
transaction and realized a gain, you must allocate the
For more information on partial dispositions of MACRS
property, see Regulations section 1.168(i)-8(d).
2
Instructions for Form 4797 (2023)
is treated as sold at its FMV on the last business day of
that year.
Elective partial dispositions. If you elect to recognize a
partial disposition of a MACRS asset, report the gain or
loss (if any) on Form 4797, Part I, II, or III, as applicable,
and include the words “Partial Disposition Election” in the
description of the partially disposed asset. See the
instructions for Parts I, II, and III. For more information on
the disposition of MACRS assets, see Regulations section
1.168(i)-8.
Unless you are a new taxpayer, the election must be
made by the due date (not including extensions) of the tax
return for the year prior to the year for which the election
becomes effective.
If you are a trader in securities or commodities with a
mark-to-market election under section 475(f) in effect for
the tax year, the following special rules apply.
Required partial dispositions. Report the gain or loss
(if any) on the following partial dispositions of MACRS
assets on Form 4797, Part I, II, or III, as applicable.
Gains and losses from all securities or commodities
•
held in connection with your trading business (including
those marked to market) are treated as ordinary income
and losses, instead of capital gains and losses. As a
result, the lower capital gain tax rates and the limitation on
capital losses don’t apply.
Sale of a portion of a MACRS asset.
•
Involuntary conversion of a portion of a MACRS asset
•
other than from a casualty or theft.
Like-kind exchange of a portion of a MACRS asset
•
(Form 4797, line 5 or 16).
The gain or loss from each security or commodity held
•
See the instructions for lines 1b and 1c and the
instructions for Parts I, II, and III. Also, see Other Forms
in connection with your trading business (including those
marked to market) is reported on Form 4797, Part II,
Who Made a Mark-to-Market Election in the instructions
for line 10.
Disposition of Assets That Constitute a Trade or
Business
The wash sale rule does not apply to securities or
•
If you sell a group of assets that make up a trade or
business and the buyer's basis in the assets are
determined wholly by the amount paid for the assets, both
you and the buyer must generally allocate the total sales
price to the assets transferred. File Form 8594, Asset
Acquisition Statement, to report the sale. See the
Instructions for Form 8594. Also, see Pub. 544 for more
details on the sale of business assets.
commodities held in connection with your trading
business.
For details on the mark-to-market election for traders
and how to make the election, see section 475(f). Also
see Pub. 550.
Sale of Home Used for Business
If you sold property that was your home and you also used
it for business, you may need to use Form 4797 to report
the sale of the part used for business (or the sale of the
entire property if used entirely for business). Gain or loss
on the sale of the home may be a capital gain or loss or an
ordinary gain or loss. Any gain on the personal part of the
property is a capital gain. You cannot deduct a loss on the
personal part. Any gain or loss on the part of the home
used for business is an ordinary gain or loss, as
Installment Sales
If you sold property at a gain and you will receive a
payment in a tax year after the year of sale, you must
generally report the sale on the installment method unless
you elect not to do so.
Use Form 6252 to report the sale on the installment
method. Also use Form 6252 to report any payment
received during your 2023 tax year from a sale made in an
earlier year that you reported on the installment method.
Enter any gain from the installment sale on Form 4797,
line 4 or line 15, as applicable. See the instructions for
Form 6252.
To elect out of the installment method, report the full
amount of the gain on a timely filed return (including
extensions). If you timely filed your tax return without
making the election, you can still make the election by
filing an amended return within 6 months of the due date
of your return (excluding extensions). Enter “Filed
pursuant to section 301.9100-2” at the top of the amended
return.
applicable, reportable on Form 4797. Any gain or loss on
the part producing income for which the underlying activity
does not rise to the level of a trade or business is a capital
gain or loss, as applicable. See Disposition of Depreciable
details, see Pub. 544. Also, see Pub. 523, Selling Your
Home.
Exclusion of gain on sale of home used for business.
You may be able to exclude part or all of the gain figured
on Form 4797 if the property sold was used for business
and was also owned and used as your principal residence
during the 5-year period ending on the date of the sale.
During that 5-year period, you must have owned and used
the property as your personal residence for 2 or more
years. However, the exclusion may not apply to the part of
the gain that is allocated to any period after December 31,
2008, during which the property was not used as your
principal residence.
For a detailed discussion of installment sales, see Pub.
537.
Traders Who Made a
Mark-to-Market Election
A trader in securities or commodities may elect under
section 475(f) to use the mark-to-market method to
account for securities or commodities held in connection
with a trading business. Under this method of accounting,
any security or commodity held at the end of the tax year
If the property was held more than 1 year after you
converted it to business use, complete Part III to figure the
amount of the gain. Do not take the exclusion into account
when figuring the gain on line 24. If line 22 includes
depreciation for periods after May 6, 1997, you cannot
Instructions for Form 4797 (2023)
3
exclude gain to the extent of that depreciation. On Part I,
line 2, enter “Section 121 exclusion,” and enter the amount
of the exclusion as a (loss) in column (g).
If the property was held for 1 year or less after you
converted it to business use, report the sale and the
amount of the exclusion, if any, in a similar manner on Part
II, line 10.
For details and exceptions, including how to figure gain
on the sale of a home used for business and the amount
of the exclusion, see section 121 and Pub. 523.
current tax year’s income. If you make the election, the
eligible capital gain is included in taxable income only to
the extent, if any, the amount of realized gain exceeds the
aggregate amount invested in a QOF during the 180-day
period.
A taxpayer may elect to temporarily defer a qualified
section 1231 gain (gains derived from the sale of property
used in a trade or business, including gains from
installment sales and like-kind exchanges) by investing
the amount of the eligible gain into a QOF. Qualified
section 1231 gains are eligible to be invested into a QOF
to the extent the section 1231 gain exceeds any amount
that is treated as ordinary income due to depreciation
recapture as required by sections 1245 and 1250.
Sections 1245 and 1250 gain may not be deferred into a
QOF. For more information, see section 1400Z-2 and the
related regulations.
Involuntary Conversion of Property
You may not have to pay tax on a gain from an involuntary
or compulsory conversion of property. See Pub. 544 for
details.
Passive Loss Limitations
If you have an overall loss from passive activities and you
report a loss on an asset used in a passive activity, use
Form 8582, Passive Activity Loss Limitations, or Form
8810, Corporate Passive Activity Loss and Credit
Limitations, as applicable, to see how much loss is
allowed before entering it on Form 4797.
How to report. Report the gain including any
depreciation recapture required by sections 1245 and
1250 as it would otherwise be reported if you were not
making the election. Then, on Form 4797, line 2, report
the qualified section 1231 gains you are electing to defer
as a result of an investment into a QOF within 180 days of
the date sold. If you are reporting the sale directly on Form
4797, line 2, use the line directly below the line on which
you reported the sale. In column (a), identify the section
1231 gains invested into a QOF as “QOF investment to
Form 8949”; columns (b), (c), (d), (e), and (f) will remain
blank. Report the amount of section 1231 gains invested
into a QOF as a negative amount (in parentheses) in
column (g).
You cannot claim unused passive activity credits when
you dispose of your interest in an activity. However, if you
dispose of your entire interest in an activity, you may elect
to increase the basis of the credit property by the original
basis reduction of the property to the extent that the credit
has not been allowed because of the passive activity
rules. Make the election on Form 8582-CR, Passive
Activity Credit Limitations, or Form 8810, as applicable.
No basis adjustment may be elected on a partial
For example, if a taxpayer realizes $300,000 of section
1231 gains in a tax year but chooses to defer $75,000 of
section 1231 gains by investing those gains into a QOF
within 180 days of the date of sale, the taxpayer would
enter “QOF investment to Form 8949” in column (a) and
enter ($75,000) in column (g).
Similarly, if the taxpayer disposed of an investment in a
QOF during the tax year triggering recognition of section
1231 deferred gains, the taxpayer should report the gain
on a separate row in line 2, enter “QOF inclusion from
section 1231 gains” in column (a), and report the $75,000
of previously deferred and currently recognizable section
1231 gains as a positive number in column (g).
disposition of your interest in an activity.
Recapture of Preproductive Expenses
If you elect under section 263A(d)(3) not to use the
uniform capitalization rules of section 263A, any plant that
you produce is treated as section 1245 property. For
dispositions of plants reportable on Form 4797, enter the
recapture amount taxed as ordinary income on Part III,
line 22. See Disposition of plants in chapter 9 of Pub. 225,
Farmer's Tax Guide, for details.
Section 197(f)(9)(B)(ii) Election
If you made the election under section 197(f)(9)(B)(ii) to
recognize gain on the disposition of a section 197
intangible and to pay a tax on that gain at the highest tax
rate, include the additional tax on Form 1040, line 16 (or
the appropriate line of other income tax returns). Check
box 3 and enter “197” and the tax in the space next to that
box. The additional tax is the amount that, when added to
any other income tax on the gain, equals the gain
multiplied by the highest tax rate.
Make the election for the deferred amount invested in a
QOF on Form 8949. See the Instructions for Form 8949. If
you held a qualified investment in a QOF at any time
during the year, you must file your return with Form 8997
attached. See the instructions for Form 8997. For more
Exclusion of Gain From Sale of DC Zone Assets
If you sold or exchanged a District of Columbia Enterprise
Zone (DC Zone) asset that you acquired after 1997 and
before 2012, and held for more than 5 years, you may be
able to exclude the amount of “qualified capital gain.” This
exclusion applies to an interest in, or property of, certain
businesses operating in the District of Columbia.
Deferral of Gain Invested in a Qualified
Opportunity Fund (QOF)
If you realized a gain from an actual or deemed sale or
exchange with an unrelated person and, during the
180-day period beginning on the date the gain is realized,
you invested any portion of the gain in a QOF, then you
may be able to elect to temporarily defer such eligible
capital gain that would otherwise be includible in the
DC Zone asset. A DC Zone asset is any of the following.
DC Zone business stock.
•
DC Zone partnership interest.
•
4
Instructions for Form 4797 (2023)
DC Zone business property.
See section 1400F (as in effect before its repeal) for
more details and special rules.
•
Qualified capital gain. The qualified capital gain is any
gain recognized on the sale or exchange of a DC Zone
asset that is a capital asset or property used in a trade or
business that you would otherwise include on Form 4797,
Part I. It does not include any of the following gain.
How to report. If applicable, report the entire gain
realized from the sale or exchange as you otherwise
would without regard to the exclusion. To report the
exclusion, enter “Qualified Community Asset Exclusion”
on Form 4797, line 2, column (a), and enter as a (loss) in
column (g) the amount of the exclusion that offsets the
gain reported on Part I, line 6.
Gain treated as ordinary income under section 1245.
Section 1250 gain figured as if section 1250 applied to
•
•
all depreciation rather than the additional depreciation.
Gain attributable to real property, or an intangible asset,
•
which is not an integral part of a DC Zone business.
Specific Instructions
Note. To show losses, enclose figures in (parentheses).
If you disposed of property you acquired by inheritance
from someone who died, enter “INHERITED” in column
(b) instead of the date you acquired the property. Also
report the sale or exchange that way if you inherited the
property from someone who died in 2010 and the
executor of the decedent's estate did not elect under
section 1022 to file Form 8939.
Gain from a related-party transaction. See Sales and
•
Exchanges Between Related Persons in chapter 2 of Pub.
544.
Gain attributable to periods after December 31, 2016.
See section 1400B (as in effect before its repeal) for
•
more details and special rules.
How to report. If applicable, report the entire gain
realized from the sale or exchange as you otherwise
would without regard to the exclusion. To report the
exclusion, enter “DC Zone Asset Exclusion” on Form
4797, line 2, column (a), and enter as a (loss) in column
(g) the amount of the exclusion that offsets the gain
reported on Part I, line 6.
Disposition by a Partnership or S
Corporation of Section 179 Property
Partners and S corporation shareholders. If you
received a Schedule K-1 from a partnership or S
corporation reporting the sale, exchange, or other
disposition of property for which a section 179 expense
deduction was previously claimed and passed through to
its partners or shareholders, you must report your share of
the transaction on Form 4797, 4684, 6252, or 8824
(whether or not you were a partner or shareholder at the
time the section 179 deduction was claimed).
Use the worksheet, later, to figure the amount to report
on Form 4797, 4684, 6252, or 8824, and to figure any
reduction in your carryforward of the unused section 179
expense deduction. The partnership or S corporation
must provide the following information on Schedule K-1 for
the transaction.
Any unrecaptured section 1250 gain is not
qualified capital gain. Identify the amount of gain
!
CAUTION
that is unrecaptured section 1250 gain and report
it on the Schedule D for the return you are filing.
Exclusion of Gain From Qualified Community
Assets
If you sold or exchanged a qualified community asset
acquired after 2001 and before 2010, you may be able to
exclude the “qualified capital gain.” The qualified gain is,
generally, any gain recognized in a trade or business that
you would otherwise include on Form 4797, Part I. This
exclusion also applies to an interest in, or property of,
certain renewal community businesses. See sections
1400F(c) and (d) (as in effect before their repeal) for
special rules and limitations.
Description of the property.
•
•
•
•
Date the property was acquired and placed in service.
Date of the sale or other disposition of the property.
Your share of the gross sales price or amount realized.
Qualified community asset. A qualified community
asset is any of the following.
Enter this amount on line 1 of the worksheet.
Qualified community stock.
•
•
•
Your share of the cost or other basis plus the expense
•
Qualified community partnership interest.
Qualified community business property.
of sale. Enter this amount on line 2 of the worksheet.
Your share of the depreciation allowed or allowable, but
•
Qualified capital gain. Qualified capital gain is any gain
recognized on the sale or exchange of a qualified
community asset that is a capital asset or property used in
a trade or business. It does not include any of the
following gains.
excluding the section 179 expense deduction. Enter this
amount on line 3a of the worksheet.
Your share of the section 179 expense deduction
•
passed through for the property and the partnership's or S
corporation's tax year(s) in which the amount was passed
through. Enter on line 3b of the worksheet your share of
the total amount of the section 179 expense deduction
passed through for the property (even if you were not a
partner or shareholder for the tax year in which it was
passed through or you did not deduct all or part of the
section 179 expense because of the dollar or taxable
income limitations). The tax year(s) in which the amount
was passed through is provided so you can determine the
amount of unused carryover section 179 expense (if any)
for the property to report on line 3c.
Gain treated as ordinary income under section 1245.
Section 1250 gain figured as if section 1250 applied to
•
•
all depreciation rather than the additional depreciation.
Gain attributable to real property, or an intangible asset,
•
that is not an integral part of a renewal community
business.
Gain from a related-party transaction. See Sales and
•
Exchanges Between Related Persons in chapter 2 of Pub.
544.
Gains from periods after December 31, 2014.
•
Instructions for Form 4797 (2023)
5
If the disposition is due to a casualty or theft, a
Disposal of timber with a retained economic interest
•
•
statement indicating so, and any additional information
you need to complete Form 4684.
that is treated as a sale, or an outright sale of timber,
under section 631(b).
If the disposition was an installment sale made during
Disposal of coal (including lignite) or domestic iron ore
•
•
the partnership's or S corporation's tax year reported
using the installment method, any information you need to
complete Form 6252. The partnership or S corporation
must also separately report your share of all payments
received for the property in the following tax years.
with a retained economic interest that is treated as a sale
under section 631(c).
Sales or exchanges of cattle and horses, regardless of
•
age, used in a trade or business for draft, breeding, dairy,
or sporting purposes and held for 24 months or more from
acquisition date.
If the disposition was a disposition of property given up
•
in an exchange involving like-kind property made during
the partnership's or S corporation's tax year, any
information you need to complete Form 8824.
Sales or exchanges of livestock other than cattle and
•
horses, regardless of age, used in a trade or business for
draft, breeding, dairy, or sporting purposes and held for 12
months or more from acquisition date.
If you have a carryforward of unused section 179
expense deduction that includes section 179 expense
deduction previously passed through to you for the
disposed asset, you must reduce your carryforward by
your share of the section 179 expense deduction shown
on Schedule K-1 (or the amount attributable to that
property included in your carryforward amount).
Note. Livestock does not include poultry, chickens,
turkeys, pigeons, geese, other birds, fish, frogs, reptiles,
etc.
Sales or exchanges of certain unharvested crops. See
•
section 1231(b)(4).
Involuntary conversions of trade or business property or
•
Note. Partnerships and S corporations do not report
these transactions on Form 4797, 4684, 6252, or 8824.
Instead, they provide their partners and shareholders the
information they need to report the transactions. See the
Instructions for Form 1065 or the Instructions for Form
1120-S for details on the information that must be
reported on Schedule K-1.
capital assets held more than 1 year in connection with a
trade or business or a transaction entered into for profit.
These conversions may result from (a) part or total
destruction, (b) theft or seizure, or (c) requisition or
condemnation (whether threatened or carried out).
However, if any recognized losses were from involuntary
conversions from fire, storm, shipwreck, or other casualty
or from theft and the losses exceed the recognized gains
from the conversions, do not include any gains or losses
from such conversions when figuring your net section
1231 gains and section 1231 losses.
Line 1
Line 1a. Enter on line 1a the total gross proceeds from:
Sales or exchanges of real estate reported to you for
•
2023 on Form(s) 1099-S (or substitute statement(s)) that
you are including on line 2, 10, or 20; and
Transactions to which section 1231 does not apply.
Section 1231 transactions do not include sales or
exchanges of:
Sales of securities or commodities reported to you for
•
2023 on Form(s) 1099-B (or substitute statement(s)) that
you are including on line 10 because you are a trader with
a mark-to-market election under section 475(f) in effect for
Election, earlier, and the instructions for line 10, later.
Inventory or property held primarily for sale to
•
customers;
Patents; inventions; models or designs (whether or not
•
patented); secret formulas or processes; copyrights;
literary, musical, or artistic compositions; letters or
memoranda; or similar property (a) created by your
personal efforts, (b) prepared or produced for you (in the
case of letters, memoranda, or similar property), or (c)
received from someone who created them or for whom
they were created, as mentioned in (a) or (b), in a way that
entitled you to the basis of the previous owner (such as by
gift); or
Line 1b. Enter on line 1b the total amount of gain that you
are including on lines 2, 10, and 24 due to the partial
dispositions of MACRS assets. See Partial Dispositions of
MACRS Property, earlier.
Line 1c. Enter on line 1c the total amount of loss that you
are including on lines 2 and 10 due to partial dispositions
of MACRS assets. See Partial Dispositions of MACRS
Property, earlier.
U.S. Government publications, including the
•
Congressional Record, that you:
1. Received from the government other than by
Part I
purchase at the normal sales price; or
Use Part I to report section 1231 transactions that are not
required to be reported in Part III.
2. Received from someone who had received it from
the government, other than by purchase at the normal
sales price, in a way that entitled you to the previous
owner’s basis (such as by gift).
Section 1231 transactions. The following are section
1231 transactions.
Sales or exchanges of real or depreciable property
•
used in a trade or business and held for more than 1 year.
To figure the holding period, begin counting on the day
after you received the property and include the day you
disposed of it.
Line 7
Partners and S corporation shareholders receive a
Schedule K-1 (Form 1065 or Form 1120-S), which
includes amounts that must be reported on Form 4797.
Following the Instructions for Schedule K-1, enter any
Cutting of timber that the taxpayer elects to treat as a
•
sale or exchange under section 631(a).
6
Instructions for Form 4797 (2023)
Worksheet for Partners and S Corporation Shareholders To
Figure Gain or Loss on Dispositions of Property for
Which a Section 179 Deduction Was Claimed
Keep for Your Records
Caution: See the Worksheet Instructions below before starting.
1. Gross sales price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2. Cost or other basis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.
1.
3. a.
b.
Depreciation (excluding section 179 expense deduction) . . . . . . . . . . . 3a.
Section 179 expense deduction . . . . . . . . . . . . . . . . . . 3b.
c.
Unused carryover of section 179 expense
deduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3c.
d.
e.
Subtract line 3c from line 3b . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3d.
Add lines 3a and 3d . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3e.
4. Adjusted basis. Subtract line 3e from line 2 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.
5. Gain or loss. Subtract line 4 from line 1. (See Where To Report Amounts From Worksheet below.) . . . . . . . . . . 5.
Worksheet Instructions
Caution: For a disposition due to casualty or theft, skip lines 1 and 5 and enter the amount from line 4 on Form 4684, line 20, and
complete the rest of Form 4684.
Lines 1, 2, 3a, and 3b. Enter these amounts from Schedule K-1 (Form 1065 or 1120-S).
Line 3c. If you were unable to claim all of the section 179 expense deduction previously passed through to you for the property (if
any), enter the smaller of line 3b or the portion of your unused carryover of section 179 expense deduction attributable to the
property. Make sure you reduce your carryover of disallowed section 179 expense deduction shown on Form 4562 by the amount on
line 3c.
Where To Report Amounts From Worksheet
Generally, the information from the above worksheet is reported on the lines specified below for Form 4797, Part III. However, for a
disposition under the installment method, complete the lines shown below for Form 6252. For dispositions of property given up in an
exchange involving like-kind property, complete the lines shown below for Form 8824.
If line 5 is a gain and the property was held more than 1 year, report the disposition as follows.
• Complete Form 4797, line 19, columns (a), (b), and (c); Form 6252, lines 1 through 4; or Form 8824, Parts I and II.
• Report the amount from line 1 above on Form 4797, line 20; Form 6252, line 5; or Form 8824, line 12 or 16.
• Report the amount from line 2 above on Form 4797, line 21; or Form 6252, line 8.
• Report the amount from line 3e above on Form 4797, line 22; or Form 6252, line 9.
• Report the amount from line 4 above on Form 4797, line 23; Form 6252, line 10; or Form 8824, line 13 or 18.
• Complete the rest of the applicable form.
If line 5 is zero or a loss and the property was held more than 1 year, report the disposition as follows. Do not report a loss on
Form 6252; instead, report the disposition on the lines shown for Form 4797.
• Complete Form 4797, line 2, columns (a), (b), and (c); or Form 8824, Parts I and II.
• Report the amount from line 1 above on Form 4797, line 2, column (d); or Form 8824, line 12 or 16.
• Report the amount from line 2 above on Form 4797, line 2, column (f).
• Report the amount from line 3e above on Form 4797, line 2, column (e).
• Report the amount from line 4 above on Form 8824, line 13 or 18.
• Complete the rest of the applicable form.
If the property was held 1 year or less, report the gain or loss on the disposition as shown below. Do not report a loss on
Form 6252; instead, report the disposition on the lines shown for Form 4797.
• Complete Form 4797, line 10, columns (a), (b), and (c); Form 6252, lines 1 through 4; or Form 8824, Parts I and II.
• Report the amount from line 1 above on Form 4797, line 10, column (d); Form 6252, line 5; or Form 8824, line 12 or 16.
• Report the amount from line 2 above on Form 4797, line 10, column (f); or Form 6252, line 8.
• Report the amount from line 3e above on Form 4797, line 10, column (e); or Form 6252, line 9.
• Report the amount from line 4 above on Form 6252, line 10; or Form 8824, line 13 or 18.
• Complete the rest of the applicable form.
amounts from your Schedule K-1 (Form 1120-S), box 9, or
Schedule K-1 (Form 1065), box 10, in Part I of Form 4797.
long-term capital gain on the Schedule D for the return you
are filing.
If the amount from line 7 is a gain and you have
nonrecaptured section 1231 losses from prior years, see
the instructions for line 8, later. If the amount from line 7 is
a gain and you did not have nonrecaptured section 1231
losses from prior years, enter the gain from line 7 as a
Line 8
Your nonrecaptured section 1231 losses are your net
section 1231 losses deducted during the 5 preceding tax
years that have not yet been applied against any net
section 1231 gain to determine how much net section
1231 gain is treated as ordinary income under this rule.
Instructions for Form 4797 (2023)
7
You had a net section 1231 loss if section 1231 losses
exceeded section 1231 gains. Gains are included only to
the extent taken into account in figuring gross income.
Losses are included only to the extent taken into account
in figuring taxable income except that the limitation on
capital losses does not apply.
A depository institution holding company defined in
•
section 3(w)(1) of the Federal Deposit Insurance Act.
Also, for this purpose, “applicable preferred stock” is
preferred stock of the Federal National Mortgage
Association (Fannie Mae), or the Federal Home Loan
Mortgage Corporation (Freddie Mac) that was:
Your net section 1231 gain on line 7 is treated as
ordinary income to the extent of your nonrecaptured
section 1231 losses. See the example below.
Held by the applicable financial institution on
•
September 6, 2008; or
Sold or exchanged by the applicable financial institution
•
after December 31, 2007, and before September 7, 2008.
Example. You had net section 1231 losses of $4,000
and $6,000 in 2018 and 2019, respectively, and net
section 1231 gains of $3,000 and $2,000 in 2022 and
2023, respectively. The 2023 net section 1231 gain of
$2,000 is entered on line 7 and the nonrecaptured net
section 1231 losses of $7,000 ($10,000 net section 1231
losses minus the $3,000 that was applied against the
2023 net section 1231 gain) are entered on line 8. The
entire $2,000 net section 1231 gain on line 7 is treated as
ordinary income and is entered on line 12 of Form 4797.
For recordkeeping purposes, the $4,000 loss from 2018 is
all recaptured ($3,000 in 2022 and $1,000 in 2023), and
you have $5,000 of section 1231 losses from 2019 left to
recapture ($6,000 minus the $1,000 recaptured this year).
In the case of a sale or exchange of applicable
preferred stock after September 6, 2008, by a taxpayer
that held such preferred stock on September 6, 2008,
these provisions apply only where the taxpayer was an
applicable financial institution at all times during the period
beginning on September 6, 2008, and ending on the date
of the sale or exchange of the applicable preferred stock.
Therefore, any Fannie Mae or Freddie Mac preferred stock
held by a taxpayer that was not an applicable financial
institution on September 6, 2008, is not applicable
preferred stock (even if such taxpayer subsequently
became an applicable financial institution).
Line 9
For guidance on preferred stock held indirectly by
applicable financial institutions through partnerships and
subsidiaries, see Rev. Proc. 2008-64, 2008-47 I.R.B.
For recordkeeping purposes, if line 9 is zero, the amount
on line 7 is the amount of net section 1231 loss recaptured
in 2023. If line 9 is more than zero, you have recaptured all
of your net section 1231 losses from prior years.
Deferred Gain From Qualifying Electric
Transmission Transaction
If line 9 is more than zero, enter the amount from line 8
on line 12. Enter the gain from line 9 as a long-term capital
gain on the Schedule D for the return you are filing.
If you sold or exchanged qualifying electric transmission
property before January 1, 2008 (before January 1, 2021,
for a qualified electric utility), and elected to defer the
realized gain, the deferred gain is recognized ratably over
the 8-year period that began with the tax year that
includes the date of the disposition. See section 451(k) for
more information on making the election for qualifying
transactions.
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.
If you received ordinary income from a sale or other
disposition of your interest in a partnership, see Pub. 541,
Partnerships.
Include the applicable portion of the deferred gain for
the current tax year on line 10. Enter “Deferred gain under
section 451(k)” in column (a) and 1/8 of the deferred gain
in column (g).
Line 10
Report on line 10 ordinary gains and losses, not included
on lines 11 through 16, including gains and losses from
property held 1 year or less.
Securities or Commodities Held by a Trader Who
Made a Mark-to-Market Election
If you receive ordinary income from a sale or other
disposition of property and deducted the cost of the
property under the tangible property de minimis safe
harbor, report the income on line 10.
Report on line 10 all gains and losses from sales and
dispositions of securities or commodities held in
connection with your trading business, including gains and
losses from marking to market securities and commodities
Mark-to-Market Election, earlier). Attach to your tax return
a statement, using the same format as line 10, showing
the details of each transaction. Separately show and
identify securities or commodities held and marked to
market at the end of the year. On line 10, enter
Deduct the loss from a qualifying abandonment of
business or investment property on line 10. See
Abandonments in Pub. 544 for more information.
Gain or Loss From Certain Preferred Stock
Gain or loss recognized by any “applicable financial
institution” from the sale or exchange of "any applicable
preferred stock" is ordinary income or loss. An applicable
financial institution includes:
“Trader—see attached” in column (a) and the totals from
the statement in columns (d), (f), and (g). Also, see the
instructions for line 1, earlier.
A financial institution defined in section 582(c)(2), and
•
8
Instructions for Form 4797 (2023)
Use Part III to figure recapture of depreciation and other
items that must be reported as ordinary income on the
disposition of certain property. Complete lines 19 through
24 to determine the gain on the disposition of the property.
If you have more than four properties to report, use
additional forms. For more details on depreciation
recapture, see Pub. 544.
Small Business Investment Company Stock
Report on line 10 ordinary losses from the sale or
exchange (including worthlessness) of stock in a small
business investment company operating under the Small
Business Investment Act of 1958. See
section 1242.
If the property was sold on the installment sale basis,
see the instructions for Form 6252 before completing Part
III. Also, if you have both installment sales and
noninstallment sales, you may want to use separate
Forms 4797, Part III, for the installment sales and the
noninstallment sales.
Also attach a statement that includes the name and
address of the small business investment company and, if
applicable, the reason the stock is worthless and the
approximate date it became worthless.
Section 1244 (Small Business) Stock
Note. If you sold or otherwise disposed of property for
which you elected to treat as an expense the costs of
certain real property, special rules apply. See section 179.
For special rules for determining gain or loss and
determining if the basis of the property is treated as
section 1245 or section 1250 property, see Pub. 544.
Individuals report ordinary losses from the sale or
exchange (including worthlessness) of section 1244
(small business) stock on line 10.
The maximum amount that may be treated as an
ordinary loss on Form 4797 is $50,000 ($100,000 if
married filing jointly). Special rules may limit the amount of
your ordinary loss if (a) you received section 1244 stock in
exchange for property with a basis in excess of its FMV, or
(b) your stock basis increased because of contributions to
capital or otherwise. See Pub. 550 for more details,
including information on what is section 1244 (small
business) stock.
Line 20
The gross sales price includes money, the FMV of other
property received, and any existing mortgage or other
debt the buyer assumes or takes the property subject to.
For casualty or theft gains, include insurance or other
reimbursement you received or expect to receive for each
item. Include on this line your insurance coverage,
whether or not you are submitting a claim for
reimbursement.
Attach a computation of the loss from the sale or
exchange of section 1244 property. On line 10, enter
“Losses on Section 1244 (Small Business Stock)” in
column (a), and enter the allowable loss in column (g).
Report on Schedule D losses in excess of the maximum
amount that may be treated as an ordinary loss (and all
gains) from the sale or exchange of section 1244 stock.
For section 1255 property disposed of in a sale,
exchange, or involuntary conversion, enter the amount
realized. For section 1255 property disposed of in any
other way, enter the FMV.
Line 21
Keep adequate records to distinguish section 1244
stock from any other stock owned in the same
corporation.
Reduce the cost or other basis of the property by the
amount of any enhanced oil recovery credit or disabled
access credit. However, do not adjust the cost or other
basis for any of the items taken into account on line 22.
Line 18a
You must complete this line if there is a gain on Form
4797, line 3; a loss on Form 4797, line 11; and a loss on
Form 4684, line 35, column (b)(ii). Enter on this line the
smaller of the loss on Form 4797, line 11, or the loss on
Form 4684, line 35, column (b)(ii). To figure which loss is
smaller, treat both losses as positive numbers. Enter the
loss from income-producing property on Schedule A
(Form 1040), line 16. Identify it as from “Form 4797,
line 18a.” Do not include any loss from property used as
an employee.
Line 22
Complete the following steps to figure the amount to enter
on line 22.
Step 1. Add amounts such as the following.
Deductions allowed or allowable for depreciation
•
(including any special depreciation allowance (see the
Instructions for Form 4562)), amortization, depletion, or
preproductive expenses (see Disposition of plants in
chapter 9 of Pub. 225).
The section 179 expense deduction.
•
Part III
The commercial revitalization deduction for buildings
•
placed in service before 2010.
Partners and shareholders reporting a disposition
The downward basis adjustment under section 50(c) (or
•
of section 179 property which was separately
reported to you on Schedule K-1 (Form 1065 or
TIP
the corresponding provision of prior law).
The deduction for qualified clean-fuel vehicle property
•
the beginning of the Specific Instructions, earlier.
or refueling property.
Deductions claimed under section 190, 193, or 1253(d)
•
Generally, for property held 1 year or less, do not
complete Part III; instead, use Part II. For exceptions, see
the chart Where To Make First Entry for Certain Items
Reported on This Form, earlier.
(2) or (3) (as in effect before the enactment of P.L.
103-66).
The basis reduction for any qualified plug-in electric or
•
qualified electric vehicle credit.
Instructions for Form 4797 (2023)
9
The basis reduction for the employer-provided childcare
4. Deduction for capital costs incurred in complying
with Environmental Protection Agency sulfur regulations.
5. Deduction for certain qualified refinery property, if in
effect before the repeal by the Tax Increase Prevention Act
of 2014. (Repealed by P.L. 113-295, section 221(a)(34)
(A), except with regards to deductions made prior to
December 19, 2014.)
•
facility credit.
Any applicable deduction for qualified energy efficient
•
commercial building property. See section 179D.
The basis reduction for the alternative motor vehicle
•
credit.
Any applicable basis reduction for the alternative fuel
•
vehicle refueling property credit.
6. Any applicable deduction for qualified energy
Any applicable basis adjustment for advanced
•
efficient commercial building property. See section 179D.
manufacturing investment credit property. See section
48D(d)(5).
7. Deduction for election to expense qualified
advanced mine safety equipment property.
Step 2. From the Step 1 total, subtract amounts such as
8. Amortization of railroad grading and tunnel bores if
in effect before the repeal by the Revenue Reconciliation
Act of 1990. (Repealed by P.L. 99-514, Tax Reform Act of
1986, section 242(a).)
9. Certain expenditures for childcare facilities if in
effect before the repeal by P.L. 101-508, section 11801(a)
(13). (Repealed by P.L. 101-508, Omnibus Budget
Reconciliation Act of 1990, section 11801(a)(13), except
with regards to deductions made prior to November 5,
1990.)
the following.
Any investment credit recapture amount if the basis of
•
the property was reduced in the tax year the property was
placed in service under section 50(c)(1) (or the
corresponding provision of prior law). See section 50(c)(2)
(or the corresponding provision of prior law).
Any section 179 or 280F(b)(2) recapture amount
•
included in gross income in a prior tax year because the
business use of the property decreased to 50% or less.
Any qualified clean-fuel vehicle property or refueling
•
property deduction you were required to recapture.
Any basis increase for qualified plug-in electric or
10. Expenditures to remove architectural and
•
transportation barriers to the handicapped and elderly.
qualified electric vehicle credit recapture.
Any basis increase for recapture of the
11. Deduction for qualified tertiary injectant expenses.
12. Certain reforestation expenditures.
•
employer-provided childcare facility credit.
Any basis increase for recapture of the alternative motor
Tangible real property (except buildings and their
•
•
structural components) if it is used in any of the following
ways.
vehicle credit.
Any basis increase for recapture of the alternative fuel
•
1. As an integral part of manufacturing, production, or
vehicle refueling property credit.
extraction, or of furnishing transportation,
Any qualified disaster expense recapture.
Any applicable recapture of the advanced
•
•
communications, or certain public utility services.
manufacturing investment credit.
2. As a research facility in these activities.
For more information on amounts recaptured as
depreciation allowed or allowable, see chapter 3 of Pub.
544.
You may have to include depreciation allowed or
allowable on another asset (and refigure the basis amount
for line 21) if you use its adjusted basis in determining the
adjusted basis of the property described on line 19.
3. For the bulk storage of fungible commodities
(including commodities in a liquid or gaseous state) used
in these activities.
A single purpose agricultural or horticultural structure
•
(as defined in section 168(i)(13)).
A storage facility (not including a building or its
•
structural components) used in connection with the
distribution of petroleum or any primary petroleum
product.
Line 23
Any railroad grading or tunnel bore (as defined in
•
For section 1255 property, enter the adjusted basis of the
section 126 property disposed of.
section 168(e)(4)).
Exceptions and limits. Special rules apply to the
Line 25
following.
Section 1245 property. Section 1245 property is
property that is depreciable (or amortizable or treated as
amortizable under, for example, section 181, 185
Gifts.
•
•
•
•
Transfers at death.
Certain tax-free transactions.
(repealed), 197, or 1253(d)(2) or (3) (as in effect before
the enactment of P.L. 103-66)) and is one of the following.
Certain like-kind exchanges, involuntary conversions,
etc.
Personal property.
•
•
•
Property distributed by a partnership to a partner.
•
•
Elevators and escalators placed in service before 1987.
Real property (other than property described under
Transfers to tax-exempt organizations where the
property will be used in an unrelated business.
tangible real property, later) adjusted for the following.
1. Amortization of certified pollution control facilities.
2. The section 179 expense deduction.
Timber property.
•
•
Dispositions of amortizable section 197 intangibles.
For more information, see section 1245(b). Also, see Pub.
544.
3. Deduction for clean-fuel vehicles and certain
refueling property.
10
Instructions for Form 4797 (2023)
(1) (or the corresponding provision of prior law) to figure
straight line depreciation. Also, if you claimed a
commercial revitalization deduction, figure straight line
depreciation using the property's applicable recovery
period under section 168.
Line 26
Section 1250 property. Section 1250 property is
depreciable real property (other than section 1245
property). Generally, section 1250 recapture applies if you
used an accelerated depreciation method or you claimed
any special depreciation allowance, or the commercial
revitalization deduction.
Line 26b
Section 1250 recapture does not apply to dispositions
of the following MACRS property placed in service after
1986 (or after July 31, 1986, if elected). You are not
required to calculate additional depreciation for these
properties on line 26.
Generally, use 100% as the percentage for this line.
However, for low-income rental housing described in
clause (i), (ii), (iii), or (iv) of section 1250(a)(1)(B), see that
section for the percentage to use.
27.5-year (30- or 40-year, if elected or required)
•
Line 26d
residential rental property (except for 27.5-year qualified
New York Liberty Zone property acquired after September
10, 2001).
Enter the additional depreciation after 1969 and before
1976. If straight line depreciation exceeds the actual
depreciation for the period after 1975, reduce line 26d by
the excess. Do not enter less than zero on line 26d.
22-, 31.5-, or 39-year (or 40-year, if elected or required)
•
nonresidential real property (except for 39-year qualified
New York Liberty Zone property acquired after September
10, 2001, and property for which you elected to claim a
commercial revitalization deduction).
Line 26f
ACRS property. Real property depreciable under ACRS
(pre-1987 rules) is subject to recapture under section
1245, except for the following, which are treated as
section 1250 property.
The amount the corporation treats as ordinary income
under section 291 is 20% of the excess, if any, of the
amount that would be treated as ordinary income if such
property were section 1245 property, over the amount
treated as ordinary income under section 1250. If the
corporation used the straight line method of depreciation,
the ordinary income under section 291 is 20% of the
amount figured under section 1245.
15-, 18-, or 19-year real property and low-income
•
housing that is residential rental property.
15-, 18-, or 19-year real property and low-income
•
housing that is used mostly outside the United States.
15-, 18-, or 19-year real property and low-income
•
Line 27
housing for which a straight line election was made.
Low-income rental housing described in clause (i), (ii),
•
Partnerships skip this section. Partners must enter on the
applicable lines of Part III amounts subject to section 1252
according to instructions from the partnership.
(iii), or (iv) of section 1250(a)(1)(B). See the instructions
for line 26b, later.
Exceptions and limits. See section 1250(d) for
You may have ordinary income on the disposition of
certain farmland held more than 1 year but less than 10
years.
exceptions and limits involving the following.
Gifts.
•
•
•
•
Transfers at death.
Certain tax-free transactions.
See section 1252 to determine if there is ordinary
income on the disposition of certain farmland for which
deductions were allowed under section 175 (relating to
soil and water conservation).
Certain like-kind exchanges, involuntary conversions,
etc.
Property distributed by a partnership to a partner.
•
•
•
Disposition of qualified low-income housing.
Gain from disposition of certain farmland is subject to
ordinary income rules under section 1252 before the
application of section 1231 (Part I).
Transfers of property to tax-exempt organizations if the
property will be used in an unrelated business.
Dispositions of property as a result of foreclosure
•
proceedings.
Enter 100% of line 27a on line 27b except as follows.
80% if the farmland was disposed of within the 6th year
•
Special rules. Special rules apply in the following cases.
after it was acquired.
For additional depreciation attributable to rehabilitation
•
60% if disposed of within the 7th year.
40% if disposed of within the 8th year.
20% if disposed of within the 9th year.
•
•
•
expenditures, see section 1250(b)(4).
If substantial improvements have been made, see
•
section 1250(f).
Skip line 27 if you dispose of such farmland during the
Line 26a
10th or later year after you acquired it.
Enter the additional depreciation for the period after 1975.
Additional depreciation is the excess of actual
Line 28
If you had a gain on the disposition of oil, gas, or
geothermal property placed in service before 1987, treat
all or part of the gain as ordinary income. Include on
line 22 of Form 4797 any depletion allowed (or allowable)
in determining the adjusted basis of the property.
depreciation (including any special depreciation
allowance, or commercial revitalization deduction) over
depreciation figured using the straight line method. For
this purpose, do not reduce the basis under section 50(c)
Instructions for Form 4797 (2023)
11
If you had a gain on the disposition of oil, gas,
geothermal, or other mineral properties (section 1254
property) placed in service after 1986, you must recapture
all expenses that were deducted as intangible drilling
costs, depletion, mine exploration costs, and development
costs under sections 263, 616, and 617.
Exception. Property placed in service after 1986 and
acquired under a written contract entered into before
September 26, 1985, and binding at all times thereafter is
treated as placed in service before 1987.
defined in section 280F(d)(4)) and the business use of the
property decreased to 50% or less this year, complete
column (a) of lines 33 through 35 to figure the recapture
amount.
Column (b)
If you have listed property that you placed in service in a
prior year and the business use decreased to 50% or less
this year, figure the amount to be recaptured under section
280F(b)(2). Complete column (b), lines 33 through 35.
See Pub. 463, Travel, Gift, and Car Expenses, for more
details on recapture of excess depreciation.
Note. A corporation that is an integrated oil company
completes line 28a by treating amounts amortized under
section 291(b)(2) as deductions under section 263(c).
Note. If you have more than one property subject to the
recapture rules, figure the recapture amounts separately
for each property. Show these calculations on a separate
statement and attach it to your tax return.
Line 28a
If the property was placed in service before 1987, enter
the total expenses after 1975 that:
Line 33
In column (a), enter the section 179 expense deduction
you claimed when the property was placed in service. In
column (b), enter the depreciation allowable on the
property in prior tax years (plus any section 179 expense
deduction you claimed when the property was placed in
service).
Were deducted by the taxpayer or any other person as
•
intangible drilling and development costs under section
263(c) (except previously expensed mining costs that
were included in income upon reaching the producing
state), and
Would have been reflected in the adjusted basis of the
•
property if they had not been deducted.
Line 34
In column (a), enter the depreciation that would have been
allowable on the section 179 property from the year the
property was placed in service through (and including) the
current year. See Pub. 946, How To Depreciate Property.
If the property was placed in service after 1986, enter
the total expenses that:
Were deducted under section 263, 616, or 617 by the
•
taxpayer or any other person; and
But for such deduction, would have been included in the
•
In column (b), enter the depreciation that would have
been allowable if the property had not been used more
than 50% in a qualified business. Figure the depreciation
from the year it was placed in service up to (but not
including) the current year. See Pub. 463 and Pub. 946.
basis of the property; plus
The deduction under section 611 that reduced the
•
adjusted basis of such property.
If you disposed of a portion of section 1254 property or
an undivided interest in it, see section 1254(a)(2).
Line 35
Subtract line 34 from line 33 and enter the recapture
amount as “other income” on the same form or schedule
on which you took the deduction. For example, if you took
the deduction on Schedule C (Form 1040), report the
recapture amount as other income on Schedule C (Form
1040).
Line 29a
Use 100% if the property is disposed of less than 10 years
after receipt of payments excluded from income. Use
100% minus 10% for each year, or part of a year, that the
property was held over 10 years after receipt of the
excluded payments. Use zero if 20 years or more.
Note. If you filed Schedule C or F (Form 1040) and the
property was used in both your trade or business and for
the production of income, the portion of the recapture
amount attributable to your trade or business is subject to
self-employment tax. Allocate the amount on line 35 to the
appropriate schedules.
Line 29b
If any part of the gain shown on
line 24 is treated as ordinary income under sections 1231
through 1254 (for example, section 1252), enter the
smaller of (a) line 24 reduced by the part of the gain
treated as ordinary income under the other provision, or
(b) line 29a.
Be sure to increase your basis in the property by the
recapture amount.
Part IV
Column (a)
If you took a section 179 expense deduction for property
placed in service after 1986 (other than listed property, as
12
Instructions for Form 4797 (2023)
Paperwork Reduction Act Notice. We ask for the information on this form to carry out the Internal Revenue laws of the
United States. You are required to give us the information. We need it to ensure that you are complying with these laws
and to allow us to figure and collect the right amount of tax.
You are not required to provide the information requested on a form that is subject to the Paperwork Reduction Act
unless the form displays a valid OMB control number. Books or records relating to a form or its instructions must be
retained as long as their contents may become material in the administration of any Internal Revenue law. Generally, tax
returns and return information are confidential, as required by section 6103.
The time needed to complete and file this form will vary depending on individual circumstances. The estimated burden
for individual taxpayers filing this form is approved under OMB control number 1545-0074 and is included in the
estimates shown in the instructions for their individual income tax return. The estimated burden for all other taxpayers
who file this form is shown below.
Recordkeeping
Learning about the law or the form
Preparing and sending the form to the IRS
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35 hr., 23 min.
8 hr., 20 min.
9 hr., 17 min.
If you have comments concerning the accuracy of these time estimates or suggestions for making this form simpler,
we would be happy to hear from you. See the instructions for the tax return with which this form is filed.
Instructions for Form 4797 (2023)
13