Use Form 4797 to report gain or loss from a sale, exchange, or
involuntary conversion of property used in your trade or business or
held for the production of rents or royalties. You can use Form 4797
with Form 1040, 1065, 1120, or 1120S.
Section 1231 gains and losses.
Show any section 1231 gains and losses in Part I. Carry a net gain
to Schedule D (Form 1040) as a long-term capital gain. Carry a net
loss to Part II of Form 4797 as an ordinary loss.
If you had any nonrecaptured net section 1231 losses from the
preceding 5 tax years, reduce your net gain by those losses and report
the amount of the reduction as an ordinary gain in Part II. Report any
remaining gain on Schedule D (Form 1040). See Section 1231 Gains
and Losses in chapter 3.
Ordinary gains and losses.
Show any ordinary gains and losses in Part II. This includes a net
loss or a recapture of losses from prior years figured in Part I of
Form 4797. It also includes ordinary gain figured in Part III.
Ordinary income from depreciation.
Figure the ordinary income from depreciation on personal property
and additional depreciation on real property (as discussed in chapter
3) in Part III. Carry the ordinary income to Part II of Form 4797 as
an ordinary gain. Carry any remaining gain to Part I as section 1231
gain, unless it is from a casualty or theft. Carry any remaining gain
from a casualty or theft to Form 4684.