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Instructions for Form 4797 ● Use Form 8824, Like-Kind Exchanges, for
each exchange of qualifying business or
investment property for property of a like kind.
Sales of Business Property For exchanges of property used in a trade or
business (and other noncapital assets), enter the
(Also Involuntary Conversions and Recapture Amounts gain or (loss) from Form 8824, if any, on line 5 or
17.
Under Sections 179 and 280F(b)(2)) ● If you sold property on which you claimed
Section references are to the Inter nal Revenue Code unless otherwise noted. investment credit, get Form 4255, Recapture of
Investment Credit, to see if you must recapture
some or all of the credit.
Paperwork Reduction Act General Instructions
Notice Special Rules
Purpose of Form
We ask for the information on this form to carry Allocation of purchase price.—If you acquire or
out the Internal Revenue laws of the United Use Form 4797 to report: dispose of assets that constitute a trade or
States. You are required to give us the ● The sale or exchange of property used in your business, the buyer and seller must allocate the
information. We need it to ensure that you are trade or business; depreciable and amortizable total purchase price using the residual method
complying with these laws and to allow us to property; oil, gas, geothermal, or other mineral and must file Form 8594, Asset Acquisition
figure and collect the right amount of tax. properties; and section 126 property. Statement.
The time needed to complete and file this form ● The involuntary conversion (from other than At-risk rules.—If you report a loss on an asset
will vary depending on individual circumstances. casualty or theft) of property used in your trade used in an activity for which you are not at risk,
The estimated average time is: or business and capital assets held in in whole or in part, see the instructions for Form
connection with a trade or business or a 6198, At-Risk Limitations. Also, get Pub. 925,
Recordkeeping 30 hr., 8 min. Passive Activity and At-Risk Rules. Losses from
transaction entered into for profit.
Learning about the law ● The disposition of noncapital assets other than passive activities are first subject to the at-risk
or the form 11 hr., 40 min. inventory or property held primarily for sale to rules and then to the passive activity rules.
Preparing the form 17 hr., 20 min. customers in the ordinary course of your trade or Installment sales.—If you sold property at a
business. gain and you will receive a payment in a tax year
Copying, assembling, and after the year of sale, you must report the sale
sending the form to the IRS 1 hr., 20 min. ● The recapture of section 179 expense
deductions for partners and S corporation on the installment method unless you elect not
If you have comments concerning the shareholders from property dispositions by to do so.
accuracy of these time estimates or suggestions partnerships and S corporations. Use Form 6252, Installment Sale Income, to
for making this form simpler, we would be happy report the sale on the installment method. Also
to hear from you. See the instructions for the tax ● The computation of recapture amounts under
sections 179 and 280F(b)(2), when the business use Form 6252 to report any payment received
return with which this form is filed. in 1995 from a sale made in an earlier year that
use of section 179 or listed property drops to
50% or less. you reported on the installment method.
To elect out of the installment method, report
the full amount of the gain on a timely filed
return (including extensions).
Where To Make First Entry for Certain Items Reported on This Form Get Pub. 537, Installment Sales, for more
(b) (c) details.
(a)
Held 1 year Held more Involuntary conversion of property.—You may
Type of property
or less than 1 year not have to pay tax on a gain from an
involuntary or compulsory conversion of
1 Depreciable trade or business property:
property. Get Pub. 544, Sales and Other
a Sold or exchanged at a gain Part II Part III (1245, 1250) Dispositions of Assets, for details.
b Sold or exchanged at a loss Part II Part I One-time exclusion on the sale of a home
2 Depreciable residential rental property: used for business.—If you rented or used part
a Sold or exchanged at a gain Part II Part III (1250) of your home for business and meet the
requirements to take the one-time exclusion for
b Sold or exchanged at a loss Part II Part I persons age 55 or older, you may be able to
3 Farmland held less than 10 years upon which soil, water, exclude part or all of the gain figured on line 26.
or land clearing expenses were deducted: For details on electing the one-time exclusion
a Sold at a gain Part II Part III (1252) and allocating the sales price, expenses of sale,
and the adjusted basis of the home, see the
b Sold at a loss Part II Part I
instructions for Form 2119, Sale of Your Home.
4 Disposition of cost-sharing payment property described
To report the sale and the one-time exclusion
in section 126 Part II Part III (1255)
on Form 4797, figure the gain on the part that
Held less than Held 24 months was rented or used for business in Part III. Do
5 Cattle and horses used in a trade or business for draft, not take the exclusion into account when
breeding, dairy, or sporting purposes: 24 months or more
figuring the gain on line 26, but do take it into
a Sold at a gain Part II Part III (1245) account when figuring section 1250 recapture, if
b Sold at a loss Part II Part I any, on line 28g. On line 2 of Part I, write
“Section 121 exclusion” and enter the amount of
c Raised cattle and horses sold at a gain Part II Part I the exclusion in column (g). Complete Part II of
Form 2119 and attach it and Form 4797 to your
6 Livestock other than cattle and horses used in a trade or Held less than Held 12 months
return.
business for draft, breeding, dairy, or sporting purposes: 12 months or more
Passive loss limitations.—If you have an overall
a Sold at a gain Part II Part III (1245) loss from passive activities, and you report a
b Sold at a loss Part II Part I loss on an asset used in a passive activity, use
c Raised livestock sold at a gain Part II Part I Form 8582, Passive Activity Loss Limitations, to
see how much loss is allowed before entering it
on Form 4797.