INSTRUCTIONS : SALES OF BUSINESS PROPERTY (Form 4797)
Form 4797 is a United States Internal Revenue Service tax form used to report the sale of business property. This form should also be used if your business has been subject to involuntary conversion or recapture.
Form 4797 can be obtained through the I.R.S’ website or by obtaining the documents through a local tax office.
This form is to be used in conjunction with your regular tax return.
1. Supply your name as it appears on your tax return and your identifying tax payer number (social security number for individuals or EIN for corporations.)
2. If you have any proceeds from sales or exchanges reported on a tax form 1099, report this amount on line 1.
3. In part I, list all business properties purchased or sold held for more than 1 year during the taxable year on line 2. You must include each property bought or sold, the dates acquired and sold, gross sales price, depreciation, costs of improvements, and the total gain or loss.
4. Add each amount, along with any other gains or losses as required in lines 3 through 6.
5. Report your total gains or losses on line 7.
6. Indicate non-recaptured section 1231 losses from any prior years on line 8.
7. Enter the total calculated amount on line 9 to determine your qualified gains or losses.
8. Next, move on to part II, where you will report ordinary gains and losses for property held less than 1 year.
9. Fill out part II in the same manner as part I. Ensure that you include all properties purchased and sold, with all gains and losses as required to report.
10. If you have any gains from property sales under IRS tax code sections 1245, 1250, 1252, 1254, or 1255, you must report these gains in part III of the Form 4797.
11. Describe each property that falls under these rules on line 19, including date acquired and date sold.
12. Complete the worksheet for each property in part III. Include the gross sales price, cost basis, depreciation, and total gain.
13. Fill out lines 25 through 29 as each property applies to each section.
14. Indicate total gains for all properties named in part III on lines 30 and 32.
15. If you have any recapture amounts, you must report these amounts in part IV.
16. Once completed, attach the Form 4797 to your regular tax return form. Retain a copy for your own personal records.
