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                                                                                                                 Department of the Treasury
                                                                                                                 Internal Revenue Service
2022

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 securities or commodities and made a                  •   Use Form 6252, Installment Sale 
Code unless otherwise noted.                   mark-to-market election under section                 Income, to report the sale of property 
                                               475(f).                                               under the installment method.
Future Developments                            • Election to defer a qualified section               •   Use Form 8824, Like-Kind 
                                               1231 gain (gains derived from the sale                Exchanges, to report exchanges of 
For the latest information about               of property used in a trade or business)              qualifying business or investment real 
developments related to Form 4797 and          invested in a qualified opportunity fund              property for real property of a like kind. 
its instructions, such as legislation          (QOF).                                                For exchanges of real property used in a 
enacted after they were published, go to                                                             trade or business (and other noncapital 
IRS.gov/Form4797.                              Other Forms You May                                   assets), enter the gain or (loss) from 
                                               Have To File                                          Form 8824, if any, on Form 4797, line 5 
                                                                                                     or line 16.
General Instructions                           • Use Form 4684, Casualties and                           If you sold property on which you 
                                               Thefts, to report involuntary conversions             •
                                                                                                     claimed investment credit, see Form 
Purpose of Form                                from casualties and thefts.                           4255, Recapture of Investment Credit, 
Use Form 4797 to report the following.
• The sale or exchange of:
  1. Real property used in your trade                    Where To Make First Entry for Certain Items
or business;                                                                 Reported on This Form
  2. Depreciable and amortizable 
tangible property used in your trade or                                                                          (b)                 (c)
business (however, see Disposition of                                      (a)                                    Held 1 year  Held more
Depreciable Property Not Used in Trade                    Type of property                                       or less       than 1 year
or Business, later);                           1 Depreciable tangible trade or business property:
  3. Oil, gas, geothermal, or other              a     Sold or exchanged at a gain . . . . . . . . . . . .       Part II      Part III (1245)
mineral properties; and                          b     Sold or exchanged at a loss     . . . . . . . . . . . .   Part II      Part I
  4. Section 126 property.                     2 Depreciable real trade or business property:
• The involuntary conversion (from               a     Sold or exchanged at a gain       . . . . . . . . . . .   Part II      Part III (1250)
other than casualty or theft) of property        b     Sold or exchanged at a loss     . . . . . . . . . . . .   Part II      Part I
used in your trade or business and             3 Farmland held less than 10 years upon which 
capital assets held for more than 1 year         soil or water expenses were deducted:
in connection with a trade or business or        a     Sold at a gain . . . . . . . . . . . . . . . . . . . . .  Part II      Part III (1252)
a transaction entered into for profit            b     Sold at a loss . . . . . . . . . . . . . . . . . . . . .  Part II      Part I
(however, see Disposition of                   4 Real or tangible trade or business property 
Depreciable Property Not Used in Trade           which was deducted under the de minimis safe                    Part II      Part II
or Business, later).                             harbor
• The disposition of noncapital assets         5 All other farmland used in a trade or business                  Part II      Part I
(other than inventory or property held 
                                               6 Disposition of cost-sharing payment property 
primarily for sale to customers in the 
                                                 described in section 126                                        Part II      Part III (1255)
ordinary course of your trade or 
business).                                     7 Cattle and horses used in a trade or business                   Held less    Held 24 
• The disposition of capital assets not          for draft, breeding, dairy, or sporting purposes:               than 24      months
reported on Schedule D.                                                                                          months       or more
• The gain or loss (including any                a     Sold at a gain . . . . . . . . . . . . . . . . . . . . .  Part II      Part III (1245)
related recapture) for partners and S            b     Sold at a loss . . . . . . . . . . . . . . . . . . . . .  Part II      Part I
corporation shareholders from certain            c     Raised cattle and horses sold at a gain       . . . . .   Part II      Part I
section 179 property dispositions by 
partnerships and S corporations.               8 Livestock other than cattle and horses used in a                Held less    Held 12 
• The computation of recapture                   trade or business for draft, breeding, dairy, or                than 12      months
amounts under sections 179 and                   sporting purposes:                                              months       or more
280F(b)(2) when the business use of              a     Sold at a gain. . . . . . . . . . . . . . . . . . . . . . Part II      Part III (1245)
section 179 or listed property decreases         b     Sold at a loss . . . . . . . . . . . . . . . . . . . . .  Part II      Part I
to 50% or less.                                  c     Raised livestock sold at a gain     . . . . . . . . . .   Part II      Part I
• Gains or losses treated as ordinary 
gains or losses, if you are a trader in 

Oct 25, 2022                                           Cat. No. 13087T

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and its instructions to find out if you Disposition of Depreciable gain or loss on the partial disposition of
must recapture some or all of the credit. Property Not Used in Trade or a MACRS asset (see Required partial
• Use Form 8949, Sales and Other dispositions below). MACRS assets
Dispositions of Capital Assets, to report Business include buildings (and their structural
the sale or exchange of capital assets Generally, gain from the sale or components) and other tangible
not reported on another form or exchange of depreciable property not depreciable property placed in service
schedule; gains from involuntary used in a trade or business but held for after 1986 that is used in a trade or
conversions (other than casualty or investment or for use in a not-for-profit business or for the production of
theft) of capital assets not used in your activity is capital gain. Generally, the income.
trade or business; and nonbusiness bad gain is reported on Form 8949 and
For more information on partial
debts. However, see Disposition of Schedule D. However, part of the gain
dispositions of MACRS property, see
Depreciable Property Not Used in Trade on the sale or exchange of the
Regulations section 1.168(i)-8(d).
or Business, later. depreciable property may have to be
• Use the applicable Schedule D, recaptured as ordinary income on Form Elective partial dispositions. If you
Capital Gains and Losses, for the return 4797. Use Part III of Form 4797 to figure elect to recognize a partial disposition of
you are filing to figure the overall gain or the amount of ordinary income a MACRS asset, report the gain or loss
loss from transactions reported on Form recapture. The recapture amount is (if any) on Form 4797, Part I, II, or III, as
8949 and to report transactions you included on line 31 (and line 13) of Form applicable, and include the words
don’t have to report on Form 8949. See 4797. See the instructions for Part III. If “Partial Disposition Election” in the
the Instructions for Form 8949 and the the total gain for the depreciable description of the partially disposed
instructions for the applicable property is more than the recapture asset. See the instructions for Parts I, II,
Schedule D. amount, the excess is reported on Form and III. For more information on the
8949. On Form 8949, enter “From Form disposition of MACRS assets, see
Additional information. See the 4797” in column (a) of Part I (if the Regulations section 1.168(i)-8.
instructions for the forms listed above transaction is short term) or Part II (if the Required partial dispositions.
for more information. Also see Pub. 544, transaction is long term), and skip Report the gain or loss (if any) on the
Sales and Other Dispositions of Assets, columns (b) and (c). In column (d), enter following partial dispositions of MACRS
and Pub. 550, Investment Income and the excess of the total gain over the assets on Form 4797, Part I, II, or III, as
Expenses. recapture amount. Leave columns (e) applicable.
through (g) blank and complete column
Special Rules (h). If you invested this gain into a QOF • Sale of a portion of a MACRS asset.
At-Risk Rules and intend to elect the temporary • Involuntary conversion of a portion of
a MACRS asset other than from a
deferral of the gain, see the Instructions casualty or theft.
If you report a loss on an asset used in for Form 8949; Form 8997, Initial and Like-kind exchange of a portion of a
an activity for which you are not at risk, Annual Statement of Qualified •
MACRS asset (Form 4797, line 5 or 16).
in whole or in part, see the Instructions Opportunity Fund (QOF) Investments,
for Form 6198, At-Risk Limitations. Also, and its instructions; and the instructions See the instructions for lines 1b and
see Pub. 925, Passive Activity and for the applicable Schedule D. 1c and the instructions for Parts I, II, and
At-Risk Rules. Losses from passive III. Also, see Other Forms You May
activities are subject first to the at-risk Generally, loss from the sale or Have To File, earlier.
rules and then to the passive activity exchange of depreciable property not
Disposition of Assets That
rules. used in a trade or business but held for
Depreciable Property and Other investment or for use in a not-for-profit Constitute a Trade or Business
activity is a capital loss. Report the loss If you sell a group of assets that make
Property Disposed of in the on Form 8949 in Part I (if the transaction up a trade or business and the buyer's
Same Transaction is short term) or Part II (if the transaction basis in the assets are determined
If you disposed of both depreciable is long term). You can deduct capital wholly by the amount paid for the
property and other property (for losses up to the amount of your capital assets, both you and the buyer must
example, a building and land) in the gains. In the case of taxpayers other generally allocate the total sales price to
same transaction and realized a gain, than corporations, you can also deduct the assets transferred. File Form 8594,
you must allocate the amount realized the lower of $3,000 ($1,500 if you are a Asset Acquisition Statement, to report
between the two types of property married individual filing a separate the sale. See the Instructions for Form
based on their respective fair market return), or the excess of such losses 8594. Also, see Pub. 544 for more
values (FMVs) to figure the part of the over such gains. See the Instructions for details on the sale of business assets.
gain to be recaptured as ordinary Form 8949 and the Instructions for
income because of depreciation. The Schedule D (Form 1040). Installment Sales
disposition of each type of property is If you sold property at a gain and you
reported separately in the appropriate Partial Dispositions of MACRS will receive a payment in a tax year after
part of Form 4797. For example, for Property the year of sale, you must generally
property held more than 1 year, report You may elect to recognize a partial report the sale on the installment
the sale of a building in Part III and the disposition of a Modified Accelerated method unless you elect not to do so.
land in Part I. Cost Recovery System (MACRS) asset, Use Form 6252 to report the sale on
and report the gain, loss, or other the installment method. Also use Form
deduction on a timely filed, including 6252 to report any payment received
extensions, federal tax return for the during your 2022 tax year from a sale
year of the disposition. In some cases, made in an earlier year that you
however, you are required to report the reported on the installment method.

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Enter any gain from the installment sale Sale of Home Used for Involuntary Conversion of
on Form 4797, line 4 or line 15, as Business Property
applicable. See the instructions for
Form 6252. If you sold property that was your home You may not have to pay tax on a gain
and you also used it for business, you from an involuntary or compulsory
To elect out of the installment may need to use Form 4797 to report conversion of property. See Pub. 544
method, report the full amount of the the sale of the part used for business (or for details.
gain on a timely filed return (including the sale of the entire property if used
extensions). If you timely filed your tax entirely for business). Gain or loss on Passive Loss Limitations
return without making the election, you the sale of the home may be a capital If you have an overall loss from passive
can still make the election by filing an gain or loss or an ordinary gain or loss. activities and you report a loss on an
amended return within 6 months of the Any gain on the personal part of the asset used in a passive activity, use
due date of your return (excluding property is a capital gain. You cannot Form 8582, Passive Activity Loss
extensions). Enter “Filed pursuant to deduct a loss on the personal part. Any Limitations, or Form 8810, Corporate
section 301.9100-2” at the top of the gain or loss on the part of the home Passive Activity Loss and Credit
amended return. used for business is an ordinary gain or Limitations, as applicable, to see how
loss, as applicable, reportable on Form much loss is allowed before entering it
For a detailed discussion of 4797. Any gain or loss on the part on Form 4797.
installment sales, see Pub. 537, producing income for which the You cannot claim unused passive
Installment Sales. underlying activity does not rise to the activity credits when you dispose of
level of a trade or business is a capital
Traders Who Made a your interest in an activity. However, if
gain or loss, as applicable. See you dispose of your entire interest in an
Mark-to-Market Election Disposition of Depreciable Property Not activity, you may elect to increase the
A trader in securities or commodities Used in Trade or Business, earlier. For basis of the credit property by the
may elect under section 475(f) to use more details, see Pub. 544. Also, see original basis reduction of the property
the mark-to-market method to account Pub. 523, Selling Your Home. to the extent that the credit has not been
for securities or commodities held in allowed because of the passive activity
Exclusion of gain on sale of home
connection with a trading business. rules. Make the election on Form
used for business. You may be able
Under this method of accounting, any 8582-CR, Passive Activity Credit
to exclude part or all of the gain figured
security or commodity held at the end of Limitations, or Form 8810, as
on Form 4797 if the property sold was
the tax year is treated as sold at its FMV applicable. No basis adjustment may be
used for business and was also owned
on the last business day of that year. elected on a partial disposition of your
and used as your principal residence
Unless you are a new taxpayer, the during the 5-year period ending on the interest in an activity.
election must be made by the due date date of the sale. During that 5-year
(not including extensions) of the tax period, you must have owned and used Recapture of Preproductive
return for the year prior to the year for the property as your personal residence Expenses
which the election becomes effective. for 2 or more years. However, the If you elect under section 263A(d)(3) not
exclusion may not apply to the part of to use the uniform capitalization rules of
If you are a trader in securities or the gain that is allocated to any period section 263A, any plant that you
commodities with a mark-to-market after December 31, 2008, during which produce is treated as section 1245
election under section 475(f) in effect for the property was not used as your property. For dispositions of plants
the tax year, the following special rules principal residence. reportable on Form 4797, enter the
apply. If the property was held more than 1 recapture amount taxed as ordinary
• Gains and losses from all securities year after you converted it to business income on Part III, line 22. See
or commodities held in connection with use, complete Part III to figure the Disposition of plants in chapter 9 of Pub.
your trading business (including those amount of the gain. Do not take the 225, Farmer's Tax Guide, for details.
marked to market) are treated as exclusion into account when figuring the Section 197(f)(9)(B)(ii) Election
ordinary income and losses, instead of gain on line 24. If line 22 includes
capital gains and losses. As a result, the depreciation for periods after May 6, If you made the election under section
lower capital gain tax rates and the 1997, you cannot exclude gain to the 197(f)(9)(B)(ii) to recognize gain on the
limitation on capital losses don’t apply. extent of that depreciation. On Part I, disposition of a section 197 intangible
• The gain or loss from each security or line 2, enter “Section 121 exclusion,” and to pay a tax on that gain at the
commodity held in connection with your and enter the amount of the exclusion highest tax rate, include the additional
trading business (including those as a (loss) in column (g). tax on Form 1040, line 16 (or the
marked to market) is reported on Form appropriate line of other income tax
4797, Part II, line 10. See Securities or If the property was held for 1 year or returns). Check box 3 and enter “197”
Commodities Held by a Trader Who less after you converted it to business and the tax in the space next to that
Made a Mark-to-Market Election in the use, report the sale and the amount of box. The additional tax is the amount
instructions for line 10. the exclusion, if any, in a similar manner that, when added to any other income
• The wash sale rule does not apply to on Part II, line 10. tax on the gain, equals the gain
securities or commodities held in For details and exceptions, including multiplied by the highest tax rate.
connection with your trading business. how to figure gain on the sale of a home
used for business and the amount of the
For details on the mark-to-market exclusion, see section 121 and Pub.
election for traders and how to make the 523.
election, see section 475(f). Also see
Pub. 550.

Instructions for Form 4797 (2022) -3-

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Deferral of Gain Invested in a Similarly, if the taxpayer disposed of exchange as you otherwise would
Qualified Opportunity Fund an investment in a QOF during the tax without regard to the exclusion. To
year triggering recognition of section report the exclusion, enter “DC Zone
(QOF) 1231 deferred gains, the taxpayer Asset Exclusion” on Form 4797, line 2,
If you realized a gain from an actual or should report the gain on a separate row column (a), and enter as a (loss) in
deemed sale or exchange with an in line 2, enter “QOF inclusion from column (g) the amount of the exclusion
unrelated person and, during the section 1231 gains” in column (a), and that offsets the gain reported on Part I,
180-day period beginning on the date report the $75,000 of previously line 6.
the gain is realized, you invested any deferred and currently recognizable
Any unrecaptured section 1250
portion of the gain in a QOF, then you section 1231 gains as a positive number
gain is not qualified capital gain.
may be able to elect to temporarily defer in column (g). CAUTION!
Identify the amount of gain that
such eligible capital gain that would Make the election for the deferred is unrecaptured section 1250 gain and
otherwise be includible in the current tax amount invested in a QOF on Form report it on the Schedule D for the return
year’s income. If you make the election, 8949. See the Instructions for Form you are filing.
the eligible capital gain is included in 8949. If you held a qualified investment
taxable income only to the extent, if any, in a QOF at any time during the year, Exclusion of Gain From
the amount of realized gain exceeds the you must file your return with Form 8997 Qualified Community Assets
aggregate amount invested in a QOF attached. See the instructions for Form
during the 180-day period. 8997. For more information about If you sold or exchanged a qualified
A taxpayer may elect to temporarily QOFs, see IRS.gov/Ozfaqs. community asset acquired after 2001
defer a qualified section 1231 gain and before 2010, you may be able to
Exclusion of Gain From Sale of
(gains derived from the sale of property exclude the “qualified capital gain.” The
used in a trade or business, including DC Zone Assets qualified gain is, generally, any gain
gains from installment sales and If you sold or exchanged a District of recognized in a trade or business that
like-kind exchanges) by investing the Columbia Enterprise Zone (DC Zone) you would otherwise include on Form
amount of the eligible gain into a QOF. asset that you acquired after 1997 and 4797, Part I. This exclusion also applies
Qualified section 1231 gains are eligible before 2012, and held for more than 5 to an interest in, or property of, certain
to be invested into a QOF to the extent years, you may be able to exclude the renewal community businesses. See
the section 1231 gain exceeds any amount of “qualified capital gain.” This sections 1400F(c) and (d) (as in effect
amount that is treated as ordinary exclusion applies to an interest in, or before their repeal) for special rules and
income due to depreciation recapture as property of, certain businesses limitations.
required by sections 1245 and 1250. operating in the District of Columbia. Qualified community asset. A
Sections 1245 and 1250 gain may not DC Zone asset. A DC Zone asset is qualified community asset is any of the
be deferred into a QOF. For more any of the following. following.
information, see section 1400Z-2 and DC Zone business stock. • Qualified community stock.
•
the related regulations. DC Zone partnership interest. • Qualified community partnership
•
How to report. Report the gain • DC Zone business property. interest.
• Qualified community business
including any depreciation recapture Qualified capital gain. The qualified property.
required by sections 1245 and 1250 as capital gain is any gain recognized on
it would otherwise be reported if you the sale or exchange of a DC Zone Qualified capital gain. Qualified
were not making the election. Then, on asset that is a capital asset or property capital gain is any gain recognized on
Form 4797, line 2, report the qualified used in a trade or business that you the sale or exchange of a qualified
section 1231 gains you are electing to would otherwise include on Form 4797, community asset that is a capital asset
defer as a result of an investment into a Part I. It does not include any of the or property used in a trade or business.
QOF within 180 days of the date sold. If following gain. It does not include any of the following
you are reporting the sale directly on Gain treated as ordinary income gains.
•
Form 4797, line 2, use the line directly under section 1245. • Gain treated as ordinary income
below the line on which you reported the Section 1250 gain figured as if under section 1245.
•
sale. In column (a), identify the section section 1250 applied to all depreciation • Section 1250 gain figured as if
1231 gains invested into a QOF as rather than the additional depreciation. section 1250 applied to all depreciation
“QOF investment to Form 8949”; Gain attributable to real property, or rather than the additional depreciation.
•
columns (b), (c), (d), (e), and (f) will an intangible asset, which is not an • Gain attributable to real property, or
remain blank. Report the amount of integral part of a DC Zone business. an intangible asset, that is not an
section 1231 gains invested into a QOF Gain from a related-party transaction. integral part of a renewal community
•
as a negative amount (in parentheses) See Sales and Exchanges Between business.
in column (g). Related Persons in chapter 2 of Pub. • Gain from a related-party transaction.
For example, if a taxpayer realizes 544. See Sales and Exchanges Between
$300,000 of section 1231 gains in a tax • Gain attributable to periods after Related Persons in chapter 2 of Pub.
year but chooses to defer $75,000 of December 31, 2016. 544.
• Gains from periods after December
section 1231 gains by investing those See section 1400B (as in effect 31, 2014.
gains into a QOF within 180 days of the before its repeal) for more details and
date of sale, the taxpayer would enter special rules. See section 1400F (as in effect
“QOF investment to Form 8949” in before its repeal) for more details and
column (a) and enter ($75,000) in How to report. If applicable, report the special rules.
column (g). entire gain realized from the sale or

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How to report. If applicable, report the • Your share of the depreciation Line 1
entire gain realized from the sale or allowed or allowable, but excluding the
exchange as you otherwise would section 179 expense deduction. Enter Line 1a. Enter on line 1a the total gross
without regard to the exclusion. To this amount on line 3a of the worksheet. proceeds from:
report the exclusion, enter “Qualified • Your share of the section 179 • Sales or exchanges of real estate
Community Asset Exclusion” on Form expense deduction passed through for reported to you for 2022 on Form(s)
4797, line 2, column (a), and enter as a the property and the partnership's or S 1099-S (or substitute statement(s)) that
(loss) in column (g) the amount of the corporation's tax year(s) in which the you are including on line 2, 10, or 20;
exclusion that offsets the gain reported amount was passed through. Enter on and
on Part I, line 6. line 3b of the worksheet your share of • Sales of securities or commodities
the total amount of the section 179 reported to you for 2022 on Form(s)
expense deduction passed through for 1099-B (or substitute statement(s)) that
Specific Instructions the property (even if you were not a you are including on line 10 because
partner or shareholder for the tax year in you are a trader with a mark-to-market
Note. To show losses, enclose figures which it was passed through or you did election under section 475(f) in effect for
in (parentheses). not deduct all or part of the section 179 the tax year. See Traders Who Made a
If you disposed of property you expense because of the dollar or Mark-to-Market Election, earlier, and the
acquired by inheritance from someone taxable income limitations). The tax instructions for line 10, later.
who died, enter “INHERITED” in column year(s) in which the amount was passed Line 1b. Enter on line 1b the total
(b) instead of the date you acquired the through is provided so you can amount of gain that you are including on
property. Also report the sale or determine the amount of unused lines 2, 10, and 24 due to the partial
exchange that way if you inherited the carryover section 179 expense (if any) dispositions of MACRS assets. See
property from someone who died in for the property to report on line 3c. Partial Dispositions of MACRS Property,
2010 and the executor of the decedent's • If the disposition is due to a casualty earlier.
estate did not elect under section 1022 or theft, a statement indicating so, and
to file Form 8939. any additional information you need to Line 1c. Enter on line 1c the total
complete Form 4684. amount of loss that you are including on
Disposition by a • If the disposition was an installment lines 2 and 10 due to partial dispositions
sale made during the partnership's or S of MACRS assets. See Partial
Partnership or S Dispositions of MACRS Property,
corporation's tax year reported using the
Corporation of Section 179 installment method, any information you earlier.
Property need to complete Form 6252. The
partnership or S corporation must also Part I
Partners and S corporation share- separately report your share of all Use Part I to report section 1231
holders. If you received a payments received for the property in transactions that are not required to be
Schedule K-1 from a partnership or S the following tax years. reported in Part III.
•
corporation reporting the sale, If the disposition was a disposition of Section 1231 transactions. The
exchange, or other disposition of property given up in an exchange following are section 1231 transactions.
property for which a section 179 involving like-kind property made during • Sales or exchanges of real or
expense deduction was previously the partnership's or S corporation's tax depreciable property used in a trade or
claimed and passed through to its year, any information you need to business and held for more than 1 year.
partners or shareholders, you must complete Form 8824. To figure the holding period, begin
report your share of the transaction on
Form 4797, 4684, 6252, or 8824 If you have a carryforward of unused counting on the day after you received
(whether or not you were a partner or section 179 expense deduction that the property and include the day you
shareholder at the time the section 179 includes section 179 expense deduction disposed of it.
deduction was claimed). previously passed through to you for the • Cutting of timber that the taxpayer
disposed asset, you must reduce your elects to treat as a sale or exchange
Use the worksheet, later, to figure the carryforward by your share of the under section 631(a).
amount to report on Form 4797, 4684, section 179 expense deduction shown • Disposal of timber with a retained
6252, or 8824, and to figure any on Schedule K-1 (or the amount economic interest that is treated as a
reduction in your carryforward of the attributable to that property included in sale, or an outright sale of timber, under
unused section 179 expense deduction. your carryforward amount). section 631(b).
The partnership or S corporation must
• Disposal of coal (including lignite) or
provide the following information on Note. Partnerships and S corporations domestic iron ore with a retained
Schedule K-1 for the transaction. do not report these transactions on economic interest that is treated as a
• Description of the property. Form 4797, 4684, 6252, or 8824. sale under section 631(c).
• Date the property was acquired and Instead, they provide their partners and Sales or exchanges of cattle and
•
placed in service. shareholders the information they need horses, regardless of age, used in a
• Date of the sale or other disposition to report the transactions. See the trade or business for draft, breeding,
of the property. Instructions for Form 1065 or the dairy, or sporting purposes and held for
• Your share of the gross sales price or Instructions for Form 1120-S for details 24 months or more from acquisition
amount realized. Enter this amount on on the information that must be reported date.
line 1 of the worksheet. on Schedule K-1. Sales or exchanges of livestock other
• Your share of the cost or other basis •
than cattle and horses, regardless of
plus the expense of sale. Enter this
age, used in a trade or business for
amount on line 2 of the worksheet.
draft, breeding, dairy, or sporting

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purposes and held for 12 months or on Form 4797. Following the have recaptured all of your net section
more from acquisition date. Instructions for Schedule K-1, enter any 1231 losses from prior years.
amounts from your Schedule K-1 (Form
Note. Livestock does not include 1120-S), box 9, or Schedule K-1 (Form If line 9 is more than zero, enter the
poultry, chickens, turkeys, pigeons, 1065), box 10, in Part I of Form 4797. amount from line 8 on line 12. Enter the
geese, other birds, fish, frogs, reptiles, gain from line 9 as a long-term capital
etc. If the amount from line 7 is a gain and gain on the Schedule D for the return
you have nonrecaptured section 1231 you are filing.
• Sales or exchanges of certain losses from prior years, see the
unharvested crops. See section instructions for line 8 below. If the Part II
1231(b)(4). amount from line 7 is a gain and you did If a transaction is not reportable in Part I
• Involuntary conversions of trade or not have nonrecaptured section 1231 or Part III and the property is not a
business property or capital assets held losses from prior years, enter the gain capital asset reportable on Schedule D,
more than 1 year in connection with a from line 7 as a long-term capital gain report the transaction in Part II.
trade or business or a transaction on the Schedule D for the return you are
entered into for profit. These filing. If you received ordinary income from
conversions may result from (a) part or a sale or other disposition of your
total destruction, (b) theft or seizure, or Line 8 interest in a partnership, see Pub. 541,
(c) requisition or condemnation Your nonrecaptured section 1231 Partnerships.
(whether threatened or carried out). losses are your net section 1231 losses
However, if any recognized losses were deducted during the 5 preceding tax Line 10
from involuntary conversions from fire, years that have not yet been applied Report on line 10 ordinary gains and
storm, shipwreck, or other casualty or against any net section 1231 gain to losses, not included on lines 11 through
from theft and the losses exceed the determine how much net section 1231 16, including gains and losses from
recognized gains from the conversions, gain is treated as ordinary income under property held 1 year or less.
do not include any gains or losses from this rule.
such conversions when figuring your net If you receive ordinary income from a
section 1231 gains and section 1231 You had a net section 1231 loss if sale or other disposition of property and
losses. section 1231 losses exceeded section deducted the cost of the property under
1231 gains. Gains are included only to the tangible property de minimis safe
Transactions to which section the extent taken into account in figuring harbor, report the income on line 10.
1231 does not apply. Section 1231 gross income. Losses are included only
transactions do not include sales or to the extent taken into account in Deduct the loss from a qualifying
exchanges of: figuring taxable income except that the abandonment of business or investment
• Inventory or property held primarily limitation on capital losses does not property on line 10. See Abandonments
for sale to customers; apply. in Pub. 544 for more information.
• Patents; inventions; models or
designs (whether or not patented); Your net section 1231 gain on line 7 Gain or Loss From Certain
secret formulas or processes; is treated as ordinary income to the
copyrights; literary, musical, or artistic extent of your nonrecaptured section Preferred Stock
compositions; letters or memoranda; or 1231 losses. See the example below.
Gain or loss recognized by any
similar property (a) created by your Example. You had net section 1231 “applicable financial institution” from the
personal efforts, (b) prepared or losses of $4,000 and $6,000 in 2017 sale or exchange of "any applicable
produced for you (in the case of letters, and 2018, respectively, and net section preferred stock" is ordinary income or
memoranda, or similar property), or (c) 1231 gains of $3,000 and $2,000 in loss. An applicable financial institution
received from someone who created 2021 and 2022, respectively. The 2022 includes:
them or for whom they were created, as net section 1231 gain of $2,000 is • A financial institution defined in
mentioned in (a) or (b), in a way that entered on line 7 and the nonrecaptured section 582(c)(2), and
entitled you to the basis of the previous net section 1231 losses of $7,000 • A depository institution holding
owner (such as by gift); or ($10,000 net section 1231 losses minus company defined in section 3(w)(1) of
• U.S. Government publications, the $3,000 that was applied against the the Federal Deposit Insurance Act.
including the Congressional Record, 2022 net section 1231 gain) are entered
that you: on line 8. The entire $2,000 net section Also, for this purpose, “applicable
1. Received from the government 1231 gain on line 7 is treated as preferred stock” is preferred stock of the
other than by purchase at the normal ordinary income and is entered on Federal National Mortgage Association
sales price; or line 12 of Form 4797. For recordkeeping (Fannie Mae), or the Federal Home
2. Received from someone who had purposes, the $4,000 loss from 2017 is Loan Mortgage Corporation (Freddie
received it from the government, other all recaptured ($3,000 in 2021 and Mac) that was:
than by purchase at the normal sales $1,000 in 2022), and you have $5,000 • Held by the applicable financial
price, in a way that entitled you to the of section 1231 losses from 2018 left to institution on September 6, 2008; or
previous owner’s basis (such as by gift). recapture ($6,000 minus the $1,000 • Sold or exchanged by the applicable
recaptured this year). financial institution after December 31,
2007, and before September 7, 2008.
Line 7 Line 9
Partners and S corporation For recordkeeping purposes, if line 9 is In the case of a sale or exchange of
shareholders receive a Schedule K-1 zero, the amount on line 7 is the amount applicable preferred stock after
(Form 1065 or Form 1120-S), which of net section 1231 loss recaptured in September 6, 2008, by a taxpayer that
includes amounts that must be reported 2022. If line 9 is more than zero, you held such preferred stock on September

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        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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1.  
2. Cost or other basis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2.  
3. a.   Depreciation (excluding section 179 expense deduction) . . . . . . . . . . .                        3a.  
   b.   Section 179 expense deduction . . . . . . . . . . . . . . . . . .                 3b.  
   c.   Unused carryover of section 179 expense 
        deduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3c.  
   d.   Subtract line 3c from line 3b . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3d.  
   e.   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.

6, 2008, these provisions apply only          financial institution on September 6,                              subsidiaries, see Rev. Proc. 2008-64, 
where the taxpayer was an applicable          2008, is not applicable preferred stock                            2008-47 I.R.B. 1195, available at 
financial institution at all times during the (even if such taxpayer subsequently                                IRS.gov/irb/2008-47_IRB/ar12.html.
period beginning on September 6, 2008,        became an applicable financial 
and ending on the date of the sale or         institution).
exchange of the applicable preferred 
stock. Therefore, any Fannie Mae or            For guidance on preferred stock held 
Freddie Mac preferred stock held by a         indirectly by applicable financial 
taxpayer that was not an applicable           institutions through partnerships and 

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Deferred Gain From Qualifying Section 1244 (Small Business) Where To Make First Entry for Certain
Electric Transmission Transaction Stock Items Reported on This Form, earlier.
Use Part III to figure recapture of
If you sold or exchanged qualifying Individuals report ordinary losses from depreciation and other items that must
electric transmission property before the sale or exchange (including be reported as ordinary income on the
January 1, 2008 (before January 1, worthlessness) of section 1244 (small disposition of certain property.
2021, for a qualified electric utility), and business) stock on line 10. Complete lines 19 through 24 to
elected to defer the realized gain, the determine the gain on the disposition of
deferred gain is recognized ratably over The maximum amount that may be the property. If you have more than four
the 8-year period that began with the tax treated as an ordinary loss on Form properties to report, use additional
year that includes the date of the 4797 is $50,000 ($100,000 if married forms. For more details on depreciation
disposition. See section 451(k) for more filing jointly). Special rules may limit the recapture, see Pub. 544.
information on making the election for amount of your ordinary loss if (a) you
qualifying transactions. received section 1244 stock in If the property was sold on the
exchange for property with a basis in installment sale basis, see the
Include the applicable portion of the instructions for Form 6252 before
excess of its FMV, or (b) your stock
deferred gain for the current tax year on completing Part III. Also, if you have
basis increased because of
line 10. Enter “Deferred gain under both installment sales and
contributions to capital or otherwise.
section 451(k)” in column (a) and 1/8 of noninstallment sales, you may want to
See Pub. 550 for more details, including
the deferred gain in column (g). use separate Forms 4797, Part III, for
information on what is section 1244
(small business) stock. the installment sales and the
Securities or Commodities Held by noninstallment sales.
a Trader Who Made a Attach a computation of the loss from Note. If you sold or otherwise disposed
Mark-to-Market Election the sale or exchange of section 1244 of property for which you elected to treat
property. On line 10, enter “Losses on as an expense the costs of certain real
Report on line 10 all gains and losses Section 1244 (Small Business Stock)” in property, special rules apply. See
from sales and dispositions of securities column (a), and enter the allowable loss section 179. For special rules for
or commodities held in connection with in column (g). Report on Schedule D determining gain or loss and
your trading business, including gains losses in excess of the maximum determining if the basis of the property
and losses from marking to market amount that may be treated as an is treated as section 1245 or section
securities and commodities held at the ordinary loss (and all gains) from the 1250 property, see Pub. 544.
end of the tax year (see Traders Who sale or exchange of section 1244 stock.
Made a Mark-to-Market Election, Line 20
earlier). Attach to your tax return a Keep adequate records to distinguish The gross sales price includes money,
statement, using the same format as section 1244 stock from any other stock the FMV of other property received, and
line 10, showing the details of each owned in the same corporation. any existing mortgage or other debt the
transaction. Separately show and buyer assumes or takes the property
identify securities or commodities held Line 18a
subject to. For casualty or theft gains,
and marked to market at the end of the You must complete this line if there is a include insurance or other
year. On line 10, enter “Trader—see gain on Form 4797, line 3; a loss on reimbursement you received or expect
attached” in column (a) and the totals Form 4797, line 11; and a loss on Form to receive for each item. Include on this
from the statement in columns (d), (f), 4684, line 35, column (b)(ii). Enter on line your insurance coverage, whether
and (g). Also, see the instructions for this line the smaller of the loss on Form or not you are submitting a claim for
line 1, earlier. 4797, line 11, or the loss on Form 4684, reimbursement.
line 35, column (b)(ii). To figure which
Small Business Investment loss is smaller, treat both losses as For section 1255 property disposed
positive numbers. Enter the loss from of in a sale, exchange, or involuntary
Company Stock
income-producing property on conversion, enter the amount realized.
Report on line 10 ordinary losses from Schedule A (Form 1040), line 16. For section 1255 property disposed of in
the sale or exchange (including Identify it as from “Form 4797, line 18a.” any other way, enter the FMV.
worthlessness) of stock in a small Do not include any loss from property
business investment company used as an employee. Line 21
Reduce the cost or other basis of the
operating under the Small Business property by the amount of any
Investment Act of 1958. See Part III
enhanced oil recovery credit or disabled
section 1242. Partners and shareholders access credit. However, do not adjust
TIP reporting a disposition of the cost or other basis for any of the
Also attach a statement that includes section 179 property which was items taken into account on line 22.
the name and address of the small separately reported to you on
business investment company and, if Schedule K-1 (Form 1065 or 1120-S), Line 22
applicable, the reason the stock is see Partners and S corporation Complete the following steps to figure
worthless and the approximate date it shareholders at the beginning of the the amount to enter on line 22.
became worthless. Specific Instructions, earlier.
Step 1. Add amounts such as the
Generally, for property held 1 year or following.
less, do not complete Part III; instead, • Deductions allowed or allowable for
use Part II. For exceptions, see the chart depreciation (including any special

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depreciation allowance (see the For more information on amounts Budget Reconciliation Act of 1990,
Instructions for Form 4562)), recaptured as depreciation allowed or section 11801(a)(13), except with
amortization, depletion, or allowable, see chapter 3 of Pub. 544. regards to deductions made prior to
preproductive expenses (see You may have to include November 5, 1990.)
Disposition of plants in chapter 9 of Pub. depreciation allowed or allowable on 10. Expenditures to remove
225). another asset (and refigure the basis architectural and transportation barriers
• The section 179 expense deduction. amount for line 21) if you use its to the handicapped and elderly.
• The commercial revitalization adjusted basis in determining the 11. Deduction for qualified tertiary
deduction for buildings placed in service adjusted basis of the property described injectant expenses.
before 2010. on line 19.
• The downward basis adjustment 12. Certain reforestation
under section 50(c) (or the Line 23 expenditures.
corresponding provision of prior law). For section 1255 property, enter the • Tangible real property (except
• The deduction for qualified clean-fuel adjusted basis of the section 126 buildings and their structural
vehicle property or refueling property. property disposed of. components) if it is used in any of the
• Deductions claimed under section following ways.
190, 193, or 1253(d)(2) or (3) (as in Line 25 1. As an integral part of
effect before the enactment of P.L. Section 1245 property. Section 1245 manufacturing, production, or
103-66). property is property that is depreciable extraction, or of furnishing
• The basis reduction for any qualified (or amortizable or treated as transportation, communications, or
plug-in electric or qualified electric amortizable under, for example, section certain public utility services.
vehicle credit. 181, 185 (repealed), 197, or 1253(d)(2) 2. As a research facility in these
• The basis reduction for the or (3) (as in effect before the enactment activities.
employer-provided childcare facility of P.L. 103-66)) and is one of the 3. For the bulk storage of fungible
credit. following. commodities (including commodities in
• Any applicable deduction for qualified • Personal property. a liquid or gaseous state) used in these
energy efficient commercial building • Elevators and escalators placed in activities.
property. See section 179D. service before 1987. A single purpose agricultural or
•
• The basis reduction for the alternative • Real property (other than property horticultural structure (as defined in
motor vehicle credit. described under tangible real property section 168(i)(13)).
• The basis reduction for the alternative below) adjusted for the following. A storage facility (not including a
fuel vehicle refueling property credit for •
1. Amortization of certified pollution
property placed in service before building or its structural components)
control facilities.
January 1, 2022. used in connection with the distribution
2. The section 179 expense of petroleum or any primary petroleum
Step 2. From the Step 1 total, subtract deduction. product.
amounts such as the following. • Any railroad grading or tunnel bore
• Any investment credit recapture 3. Deduction for clean-fuel vehicles
amount if the basis of the property was and certain refueling property. (as defined in section 168(e)(4)).
reduced in the tax year the property was 4. Deduction for capital costs Exceptions and limits. Special rules
placed in service under section 50(c)(1) incurred in complying with apply to the following.
(or the corresponding provision of prior Environmental Protection Agency sulfur • Gifts.
law). See section 50(c)(2) (or the regulations. • Transfers at death.
corresponding provision of prior law). 5. Deduction for certain qualified • Certain tax-free transactions.
• Any section 179 or 280F(b)(2) refinery property, if in effect before the • Certain like-kind exchanges,
involuntary conversions, etc.
recapture amount included in gross repeal by the Tax Increase Prevention
income in a prior tax year because the Act of 2014. (Repealed by P.L. 113-295, • Property distributed by a partnership
to a partner.
business use of the property decreased section 221(a)(34)(A), except with
to 50% or less. regards to deductions made prior to • Transfers to tax-exempt
organizations where the property will be
• Any qualified clean-fuel vehicle December 19, 2014.)
property or refueling property deduction used in an unrelated business.
6. Any applicable deduction for • Timber property.
you were required to recapture. qualified energy efficient commercial • Dispositions of amortizable section
• Any basis increase for qualified
building property. See section 179D.
plug-in electric or qualified electric 197 intangibles.
vehicle credit recapture. 7. Deduction for election to expense For more information, see section
• Any basis increase for recapture of qualified advanced mine safety 1245(b). Also, see Pub. 544.
the employer-provided childcare facility equipment property.
Line 26
credit. 8. Amortization of railroad grading
• Any basis increase for recapture of and tunnel bores if in effect before the Section 1250 property. Section 1250
the alternative motor vehicle credit. repeal by the Revenue Reconciliation property is depreciable real property
• Any basis increase for recapture of Act of 1990. (Repealed by P.L. 99-514, (other than section 1245 property).
the alternative fuel vehicle refueling Tax Reform Act of 1986, section Generally, section 1250 recapture
property credit. 242(a).) applies if you used an accelerated
depreciation method or you claimed any
• Any qualified disaster expense 9. Certain expenditures for childcare
special depreciation allowance, or the
recapture. facilities if in effect before the repeal by
commercial revitalization deduction.
P.L. 101-508, section 11801(a)(13).
(Repealed by P.L. 101-508, Omnibus

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Section 1250 recapture does not Line 26a 175 (relating to soil and water
apply to dispositions of the following conservation).
MACRS property placed in service after Enter the additional depreciation for the Gain from disposition of certain
1986 (or after July 31, 1986, if elected). period after 1975. Additional farmland is subject to ordinary income
You are not required to calculate depreciation is the excess of actual rules under section 1252 before the
additional depreciation for these depreciation (including any special application of section 1231 (Part I).
properties on line 26. depreciation allowance, or commercial
Enter 100% of line 27a on line 27b
• 27.5-year (30- or 40-year, if elected revitalization deduction) over
except as follows.
or required) residential rental property depreciation figured using the straight
(except for 27.5-year qualified New York line method. For this purpose, do not • 80% if the farmland was disposed of
within the 6th year after it was acquired.
Liberty Zone property acquired after reduce the basis under section 50(c)(1)
September 10, 2001). (or the corresponding provision of prior • 60% if disposed of within the 7th
year.
• 22-, 31.5-, or 39-year (or 40-year, if law) to figure straight line depreciation.
elected or required) nonresidential real Also, if you claimed a commercial • 40% if disposed of within the 8th
year.
property (except for 39-year qualified revitalization deduction, figure straight
New York Liberty Zone property line depreciation using the property's • 20% if disposed of within the 9th
year.
acquired after September 10, 2001, and applicable recovery period under
property for which you elected to claim a section 168. Skip line 27 if you dispose of such
commercial revitalization deduction). farmland during the 10th or later year
ACRS property. Real property Line 26b after you acquired it.
depreciable under ACRS (pre-1987 Line 28
rules) is subject to recapture under Generally, use 100% as the percentage If you had a gain on the disposition of
section 1245, except for the following, for this line. However, for low-income oil, gas, or geothermal property placed
which are treated as section 1250 rental housing described in clause (i), in service before 1987, treat all or part of
property. (ii), (iii), or (iv) of section 1250(a)(1)(B), the gain as ordinary income. Include on
• 15-, 18-, or 19-year real property and see that section for the percentage to line 22 of Form 4797 any depletion
low-income housing that is residential use. allowed (or allowable) in determining
rental property.
the adjusted basis of the property.
• 15-, 18-, or 19-year real property and Line 26d If you had a gain on the disposition of
low-income housing that is used mostly
outside the United States. oil, gas, geothermal, or other mineral
• 15-, 18-, or 19-year real property and Enter the additional depreciation after properties (section 1254 property)
low-income housing for which a straight 1969 and before 1976. If straight line placed in service after 1986, you must
line election was made. depreciation exceeds the actual recapture all expenses that were
• Low-income rental housing described depreciation for the period after 1975, deducted as intangible drilling costs,
in clause (i), (ii), (iii), or (iv) of section reduce line 26d by the excess. Do not depletion, mine exploration costs, and
1250(a)(1)(B). See the instructions for enter less than zero on line 26d. development costs under sections 263,
line 26b, later. 616, and 617.
Line 26f
Exceptions and limits. See section Exception. Property placed in service
1250(d) for exceptions and limits after 1986 and acquired under a written
The amount the corporation treats as
involving the following. contract entered into before September
ordinary income under section 291 is
• Gifts. 26, 1985, and binding at all times
20% of the excess, if any, of the amount
• Transfers at death. thereafter is treated as placed in service
that would be treated as ordinary
• Certain tax-free transactions. before 1987.
income if such property were section
• Certain like-kind exchanges,
1245 property, over the amount treated
involuntary conversions, etc. Note. A corporation that is an
as ordinary income under section 1250.
• Property distributed by a partnership integrated oil company completes
If the corporation used the straight line
to a partner. line 28a by treating amounts amortized
method of depreciation, the ordinary
• Disposition of qualified low-income under section 291(b)(2) as deductions
income under section 291 is 20% of the
housing. under section 263(c).
amount figured under section 1245.
• Transfers of property to tax-exempt
organizations if the property will be used Line 27 Line 28a
in an unrelated business. Partnerships skip this section. Partners
• Dispositions of property as a result of must enter on the applicable lines of If the property was placed in service
foreclosure proceedings. Part III amounts subject to section 1252 before 1987, enter the total expenses
Special rules. Special rules apply in according to instructions from the after 1975 that:
the following cases. partnership. • Were deducted by the taxpayer or
any other person as intangible drilling
• For additional depreciation and development costs under section
attributable to rehabilitation You may have ordinary income on
expenditures, see section 1250(b)(4). the disposition of certain farmland held 263(c) (except previously expensed
• If substantial improvements have more than 1 year but less than 10 years. mining costs that were included in
income upon reaching the producing
been made, see section 1250(f). See section 1252 to determine if state), and
there is ordinary income on the • Would have been reflected in the
disposition of certain farmland for which adjusted basis of the property if they
deductions were allowed under section had not been deducted.

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If the property was placed in service after 1986 (other than listed property, as In column (b), enter the depreciation
after 1986, enter the total expenses defined in section 280F(d)(4)) and the that would have been allowable if the
that: business use of the property decreased property had not been used more than
• Were deducted under section 263, to 50% or less this year, complete 50% in a qualified business. Figure the
616, or 617 by the taxpayer or any other column (a) of lines 33 through 35 to depreciation from the year it was placed
person; and figure the recapture amount. in service up to (but not including) the
• But for such deduction, would have current year. See Pub. 463 and Pub.
been included in the basis of the Column (b) 946.
property; plus If you have listed property that you
• The deduction under section 611 that placed in service in a prior year and the Line 35
reduced the adjusted basis of such business use decreased to 50% or less Subtract line 34 from line 33 and enter
property. this year, figure the amount to be the recapture amount as “other income”
recaptured under section 280F(b)(2). on the same form or schedule on which
If you disposed of a portion of section Complete column (b), lines 33 through you took the deduction. For example, if
1254 property or an undivided interest in 35. See Pub. 463, Travel, Gift, and Car you took the deduction on Schedule C
it, see section 1254(a)(2). Expenses, for more details on recapture (Form 1040), report the recapture
of excess depreciation. amount as other income on Schedule C
Line 29a (Form 1040).
Use 100% if the property is disposed of Note. If you have more than one
less than 10 years after receipt of property subject to the recapture rules, Note. If you filed Schedule C or F
payments excluded from income. Use figure the recapture amounts separately (Form 1040) and the property was used
100% minus 10% for each year, or part for each property. Show these in both your trade or business and for
of a year, that the property was held calculations on a separate statement the production of income, the portion of
over 10 years after receipt of the and attach it to your tax return. the recapture amount attributable to
excluded payments. Use zero if 20 your trade or business is subject to
years or more. Line 33 self-employment tax. Allocate the
In column (a), enter the section 179 amount on line 35 to the appropriate
Line 29b expense deduction you claimed when schedules.
If any part of the gain shown on the property was placed in service. In
line 24 is treated as ordinary income column (b), enter the depreciation Be sure to increase your basis in the
under sections 1231 through 1254 (for allowable on the property in prior tax property by the recapture amount.
example, section 1252), enter the years (plus any section 179 expense
smaller of (a) line 24 reduced by the part deduction you claimed when the
of the gain treated as ordinary income property was placed in service).
under the other provision, or (b)
line 29a. Line 34
In column (a), enter the depreciation
Part IV that would have been allowable on the
section 179 property from the year the
Column (a) property was placed in service through
If you took a section 179 expense (and including) the current year. See
deduction for property placed in service Pub. 946, How To Depreciate Property.

Instructions for Form 4797 (2022) -11-

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Page 12 of 12              Fileid: … ions/i4797/2022/a/xml/cycle04/source                                                               11:34 - 25-Oct-2022

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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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 hr., 23 min.
Learning about the law or the form . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .      8 hr., 20 min.
Preparing and sending the form to the IRS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .         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.

                                                                                    -12-                                          Instructions for Form 4797 (2022)

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