Introduction

This publication explains the tax rules that apply when you dispose of property. It discusses the following topics.

• How to figure a gain or loss.
• Whether your gain or loss is ordinary or capital.
• How to treat your gain or loss when you dispose of business property.
• How to report a gain or loss.

This publication also explains whether your gain is taxable or your loss is deductible.

This publication does not discuss certain transactions covered in other IRS publications. These include the following.

• Most transactions involving stocks, bonds, options, forward and futures contracts, and similar investments, discussed in chapter 4 of Publication 550, Investment Income and Expenses.
• Sale of your main home, discussed in Publication 523, Selling Your Home.
• Installment sales, discussed in Publication 537, Installment Sales.
• Transfers of property at death, discussed in Publication 559, Survivors, Executors, and Administrators.

Disposing of property. You dispose of property when any of the following occur.

• You sell property.
• You exchange property for other property.
• Your property is condemned or disposed of under threat of condemnation.
• Your property is repossessed.
• You abandon property.
• You give property away.

Forms to file. When you dispose of property, you will usually have to file one or more of the following forms.

• Schedule D (Form 1040), Capital Gains and Losses.
• Form 4797, Sales of Business Property.
• Form 8824, Like-Kind Exchanges.

Chapter 4 illustrates how to fill out Form 4797 and Form 8824.

Comments and suggestions. We welcome your comments about this publication and your suggestions for future editions.

You can e-mail us while visiting our web site at www.irs.gov.

You can write to us at the following address:

Internal Revenue Service
Technical Publications Branch
W:CAR:MP:FP:P
1111 Constitution Ave. NW
Washington, DC 20224

We respond to many letters by telephone. Therefore, it would be helpful if you would include your daytime phone number, including the area code, in your correspondence.

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