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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).

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 .

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