Form 4797: How and When to Fill It Out

For those businesses that have sold any business property within the last year, the appropriate IRS form needed for filling would be IRS form 4797.  Several reasons to use this form are stated below as they appear on the IRS website.  Also, it is important to note that for 2009 filing, there are some new rules concerning sales of homes used for business purposes.  Below are the IRS stated reasons for using this form to report:

  1. The sale or exchange of:
    1. Property used in your trade or business;
    2. Depreciable and amortizable property;
    3. Oil, gas, geothermal, or other mineral property
    4. Section 126 Property
  2. The involuntary conversion (from other than casualty or theft) of property used in your trade or business and capital assets held in connection with a trade or business or a transaction entered into for profit.
  3. The disposition of capital assets not reported on schedule D.
  4. The gain or loss (including any related recapture) for partners and S corporations shareholders from certain section 179 property dispositions by partnerships (other than electing large partnerships) and S corporations.
  5. The computation of recapture amounts under section 179 and 280F(b)(2) when the business use of section 179 or listed property decreases to 50% or less


Many people find confusion with whether or not use of this form is appropriate for their needs, and if it is, how exactly it should be filled out due to the many rules that apply.  To see these rules and the complete set of instructions offered by the IRS, click this link.  Once you decide you are comfortable and understanding, this is the actual form that you will be filling out.  If you take a look at it, you will notice that it is divided into four sections.  If you are like many who when they attempt to do this and find a need for more help, we would be happy to try to assist any problems or questions you leave us in the comments section or question page.

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6 thoughts on “Form 4797: How and When to Fill It Out

  1. dGuru

    Hello Paul,
    Schedule E: The expense to operate rental property, such as repairs, property tax, etc.
    Expense of sale: What costs did you incur to sell the property? For example, commissions to the broker, legal fees, etc.

  2. Hi, I bought the rental property in 2006 and sold in 2014. I do have income and expenses which I show on Schedule E. Since I sold the property, I also fill the form 4797; I am not sure what expenses can comes under “Expenses of Sale” in form 4797 since I already had my expenses on Schedule E. Please advise. Thank you!

  3. What can you include in your adjusted basis (for example: improvements, depreciation for straight life, etc)

  4. we retired in 2009-(over the road trucker) we sold our 10 year old truck–am I understanding it right that I fill out section III of form 4797–line 19 thru 24 and then bring the amount down to line 30–then where on first page do I go–I do our own taxes and this form is very confusing. any help would be very appreciated

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