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Category: Questions about Income

I sold some assets. When would I report the sale as a "sale of business property" instead of a capital gain?

Generally, you would report the sale of any of the items below as the "sale of business property":

  • Property used in your trade or business
  • Depreciable and amortizable property
  • Oil, gas, geothermal, or other mineral properties
  • Section 126 property
  • 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.
  • 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 (other than electing large 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.

If you sold any of the property listed above, you would report this on Form 4797. You can find this in our program by going to Federal Section > Income > Enter Myself > Other Income > Sale of Business Property (Form 4797) or using our Search Bar on the top of the screen within the program.

If you sold a capital asset that was not used in your business, you would report that sale on a Schedule D. You can find the Schedule D in our program by going to Federal Section > Income > Enter Myself > Capital Gain and Losses or using the Search Bar on the top of the screen.

For more information, please reference either IRS Publication 544, Sales and Other Dispositions of Assets, or the Instructions for Form 4797.