4797 Instructions for Form 4797

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2023

Department of the Treasury
Internal Revenue Service

Instructions for Form 4797
Sales of Business Property
(Also Involuntary Conversions and Recapture Amounts
Under Sections 179 and 280F(b)(2))

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Section references are to the Internal Revenue
Code unless otherwise noted.

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/Form4797.

General Instructions

Purpose of Form

Use Form 4797 to report the following.
• The sale or exchange of:
1. Real property used in your trade
or business;
2. Depreciable and amortizable
tangible property used in your trade or
business (however, see Disposition of
Depreciable Property Not Used in Trade
or Business, later);
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 Used in Trade
or Business, later).
• The disposition of noncapital assets
(other than inventory or property held
primarily for sale to customers in the
ordinary course of your trade or
business).
• The disposition of capital assets not
reported on Schedule D.
• The gain or loss (including any
related recapture) for partners and S
corporation shareholders from certain
section 179 property dispositions by
partnerships 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.
• Gains or losses treated as ordinary
gains or losses, if you are a trader in
Aug 1, 2023

securities or commodities and made a
mark-to-market election under section
475(f).
• 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

Where To Make First Entry for Certain Items
Reported on This Form

(b)
Held 1 year
or less

(a)
Type of property

1

2

3

4
5
6
7

8

Depreciable tangible trade or business property:
a Sold or exchanged at a gain . . . . . . . . . . . .
b Sold or exchanged at a loss . . . . . . . . . . . .
Depreciable real trade or business property:
a Sold or exchanged at a gain . . . . . . . . . . . .
b Sold or exchanged at a loss . . . . . . . . . . . .
Farmland held less than 10 years upon which
soil or water expenses were deducted:
a Sold at a gain . . . . . . . . . . . . . . . . . . . . .
b Sold at a loss . . . . . . . . . . . . . . . . . . . . .
Real or tangible trade or business property
which was deducted under the de minimis safe
harbor
All other farmland used in a trade or business
Disposition of cost-sharing payment property
described in section 126

(c)
Held more
than 1 year

Part II
Part II

Part III (1245)
Part I

Part II
Part II

Part III (1250)
Part I

Part II
Part II

Part III (1252)
Part I

Part II

Part II

Part II

Part I

Part II

Part III (1255)

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

Part II
Part II
Part II

Part III (1245)
Part I
Part I

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

Part II
Part II
Part II

Part III (1245)
Part I
Part I

Sold at a gain . . . . . . . . . . . . . . . .
Sold at a loss . . . . . . . . . . . . . . . .
Raised cattle and horses sold at a gain

Sold at a gain . . . . . . . . . . .
Sold at a loss . . . . . . . . . .
Raised livestock sold at a gain

Cat. No. 13087T

. . . . .
. . . . .
. . . . .

. . . . . . . . . . .
. . . . . . . . . . .
. . . . . . . . . .

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 Depreciable Property Not
Used in Trade or Business, later.
• 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.

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 instructions
for the applicable Schedule D.

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.

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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.

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.

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 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.

Disposition of Depreciable
Property Not Used in Trade or
Business

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

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).

Partial Dispositions of MACRS
Property

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 of
a MACRS asset (see Required partial
dispositions below). 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.
For more information on partial
dispositions of MACRS property, see
Regulations section 1.168(i)-8(d).
-2-

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.
• 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).
See the instructions for lines 1b and
1c and the instructions for Parts I, II, and
III. Also, see Other Forms You May Have
To File, earlier.

Disposition of Assets That
Constitute a Trade or Business

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.

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
Instructions for Form 4797 (2023)

extensions). Enter “Filed pursuant to
section 301.9100-2” at the top of the
amended return.
For a detailed discussion of
installment sales, see Pub. 537.

Traders Who Made a
Mark-to-Market Election

gain or loss on the part of the home
used for business is an ordinary gain or
loss, as 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 Property Not
Used in Trade or Business, earlier. For
more details, see Pub. 544. Also, see
Pub. 523, Selling Your Home.

much loss is allowed before entering it
on Form 4797.
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 disposition of your
interest in an activity.

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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 is treated as sold at its FMV
on the last business day of that year.
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.
• 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.
• The gain or loss from each security or
commodity held in connection with your
trading business (including those
marked to market) is reported on Form
4797, Part II, line 10. See Securities or
Commodities Held by a Trader Who
Made a Mark-to-Market Election in the
instructions for line 10.
• The wash sale rule does not apply to
securities or 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
Instructions for Form 4797 (2023)

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.
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 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.

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
-3-

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.

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 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.

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.

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.

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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).
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).
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 information about
QOFs, see IRS.gov/Ozfaqs.

DC Zone asset. A DC Zone asset is
any of the following.
• DC Zone business stock.
• DC Zone partnership interest.
• DC Zone business property.

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.
• 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.
• 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.

Any unrecaptured section 1250
gain is not qualified capital gain.
CAUTION Identify the amount of gain 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
-4-

Qualified community asset. A
qualified community asset is any of the
following.
• Qualified community stock.
• Qualified community partnership
interest.
• Qualified community business
property.

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.
• 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.
See section 1400F (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 “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.

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
Instructions for Form 4797 (2023)

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.

Disposition by a
Partnership or S
Corporation of Section 179
Property

• If the disposition is due to a casualty
or theft, a statement indicating so, and
any additional information you need to
complete Form 4684.
• If the disposition was an installment
sale made during 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.
• 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.
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).

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.

Part I

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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.
• 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. Enter this amount on
line 1 of the worksheet.
• Your share of the cost or other basis
plus the expense of sale. Enter this
amount on line 2 of the worksheet.
• Your share of the depreciation
allowed or allowable, but 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.
Instructions for Form 4797 (2023)

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.

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
• 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
the tax year. See Traders Who Made a
Mark-to-Market Election, earlier, and the
instructions for line 10, later.
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.

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Use Part I to report section 1231
transactions that are not required to be
reported in Part III.

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.
• Cutting of timber that the taxpayer
elects to treat as a sale or exchange
under section 631(a).
• Disposal of timber with a retained
economic interest that is treated as a
sale, or an outright sale of timber, under
section 631(b).
• Disposal of coal (including lignite) or
domestic iron ore 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.
• 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.
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 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.
Transactions to which section
1231 does not apply. Section 1231
transactions do not include sales or
exchanges of:
• 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
• U.S. Government publications,
including the Congressional Record,
that you:
1. Received from the government
other than by purchase at the normal
sales price; or
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).

gain is treated as ordinary income under
this rule.
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.

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.
Deduct the loss from a qualifying
abandonment of business or investment
property on line 10. See Abandonments
in Pub. 544 for more information.

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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
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.
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 below. 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 long-term capital gain
on the Schedule D for the return you are
filing.

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

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.

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).

Line 9

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.
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.

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.

Line 10

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:
• A financial institution defined in
section 582(c)(2), and
• 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:
• 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.

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).
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. 1195, available at
IRS.gov/irb/2008-47_IRB/ar12.html.

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.
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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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 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.

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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.

Deferred Gain From Qualifying
Electric Transmission Transaction
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
Instructions for Form 4797 (2023)

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.
Include the applicable portion of the
deferred gain for the current tax year on
-7-

line 10. Enter “Deferred gain under
section 451(k)” in column (a) and 1/8 of
the deferred gain in column (g).

Securities or Commodities Held by
a Trader Who Made a
Mark-to-Market Election
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 held at the
end of the tax year (see Traders Who
Made a 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 “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.

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.

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.

Keep adequate records to distinguish
section 1244 stock from any other stock
owned in the same corporation.

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.

Line 20

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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.
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
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.
Attach a computation of the loss from
the sale or exchange of section 1244

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.

Part III

Partners and shareholders

TIP reporting a disposition of

section 179 property which was
separately reported to you on
Schedule K-1 (Form 1065 or 1120-S),
see Partners and S corporation
shareholders at the beginning of the
Specific Instructions, earlier.

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.
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.
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.
Note. If you sold or otherwise disposed
of property for which you elected to treat
-8-

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

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 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.
• The commercial revitalization
deduction for buildings placed in service
before 2010.
• The downward basis adjustment
under section 50(c) (or the
corresponding provision of prior law).
• The deduction for qualified clean-fuel
vehicle property or refueling property.
• Deductions claimed under section
190, 193, or 1253(d)(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.
• The basis reduction for the
employer-provided childcare facility
credit.
Instructions for Form 4797 (2023)

• 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.

• Real property (other than property
described under tangible real property
below) adjusted for the following.
1. Amortization of certified pollution
control facilities.
2. The section 179 expense
deduction.
3. Deduction for clean-fuel vehicles
and certain refueling property.
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.)
6. Any applicable deduction for
qualified energy efficient commercial
building property. See section 179D.
7. Deduction for election to expense
qualified advanced mine safety
equipment property.
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.)
10. Expenditures to remove
architectural and transportation barriers
to the handicapped and elderly.
11. Deduction for qualified tertiary
injectant expenses.
12. Certain reforestation
expenditures.
• Tangible real property (except
buildings and their structural
components) if it is used in any of the
following ways.
1. As an integral part of
manufacturing, production, or
extraction, or of furnishing
transportation, communications, or
certain public utility services.
2. As a research facility in these
activities.
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.
• Any railroad grading or tunnel bore
(as defined in section 168(e)(4)).

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Step 2. From the Step 1 total, subtract
amounts such as 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 qualified electric
vehicle credit recapture.
• Any basis increase for recapture of
the employer-provided childcare facility
credit.
• Any basis increase for recapture of
the alternative motor vehicle credit.
• Any basis increase for recapture of
the alternative fuel vehicle refueling
property credit.
• Any qualified disaster expense
recapture.
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.

Line 23

For section 1255 property, enter the
adjusted basis of the section 126
property disposed of.

Line 25
Section 1245 property. Section 1245
property is property that is depreciable
(or amortizable or treated as
amortizable under, for example, section
181, 185 (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.
• Personal property.
• Elevators and escalators placed in
service before 1987.
Instructions for Form 4797 (2023)

-9-

Exceptions and limits. Special rules
apply to the following.
• Gifts.
• Transfers at death.
• Certain tax-free transactions.
• Certain like-kind exchanges,
involuntary conversions, etc.
• Property distributed by a partnership
to a partner.
• Transfers to tax-exempt organizations
where the property will be used in an
unrelated business.
• Timber property.
• Dispositions of amortizable section
197 intangibles.
For more information, see section
1245(b). Also, see Pub. 544.

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.
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.
• 27.5-year (30- or 40-year, if elected or
required) residential rental property
(except for 27.5-year qualified New York
Liberty Zone property acquired after
September 10, 2001).
• 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).
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.
• 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 housing for which a straight
line election was made.
• Low-income rental housing described
in clause (i), (ii), (iii), or (iv) of section
1250(a)(1)(B). See the instructions for
line 26b, later.

Line 26d
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.

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.

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Exceptions and limits. See section
1250(d) for exceptions and limits
involving the following.
• Gifts.
• Transfers at death.
• Certain tax-free transactions.
• Certain like-kind exchanges,
involuntary conversions, etc.
• Property distributed by a partnership
to a partner.
• Disposition of qualified low-income
housing.
• 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.
Special rules. Special rules apply in
the following cases.
• For additional depreciation
attributable to rehabilitation
expenditures, see section 1250(b)(4).
• If substantial improvements have
been made, see section 1250(f).

Line 26a
Enter the additional depreciation for the
period after 1975. Additional
depreciation is the excess of actual
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)(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 26b
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.

Line 26f

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.

Line 27

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.

You may have ordinary income on the
disposition of certain farmland held
more than 1 year but less than 10 years.
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).
Gain from disposition of certain
farmland is subject to ordinary income
rules under section 1252 before the
application of section 1231 (Part I).
Enter 100% of line 27a on line 27b
except as follows.
• 80% if the farmland was disposed of
within the 6th year after it was acquired.
• 60% if disposed of within the 7th year.
• 40% if disposed of within the 8th year.
• 20% if disposed of within the 9th year.

Skip line 27 if you dispose of such
farmland during the 10th or later year
after you acquired it.

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.
If you had a gain on the disposition of
oil, gas, geothermal, or other mineral
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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).

Line 28a

If the property was placed in service
before 1987, enter the total expenses
after 1975 that:
• 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.

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 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 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.

Line 29b

If any part of the gain shown on
line 24 is treated as ordinary income
under sections 1231 through 1254 (for
Instructions for Form 4797 (2023)

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.

Part IV
Column (a)

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.

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.

Line 33

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).

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).

Line 35

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If you took a section 179 expense
deduction for property placed in service
after 1986 (other than listed property, as
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.

Instructions for Form 4797 (2023)

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.

In column (b), enter the depreciation
that would have been allowable if the
property had not been used more than

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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.
Be sure to increase your basis in the
property by the recapture amount.

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.

TREASURY/IRS
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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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

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.

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Instructions for Form 4797 (2023)