2023 Form 4797 - Sales of Business Property

Form 4797 is used to report the sale or exchange of property used in a trade or business, for the production of income, or as rental property. This includes reporting capital gains and losses as well as recaptured depreciation, which is treated as ordinary income. The key purpose of Form 4797 is to differentiate between capital gains/losses and ordinary income, as they are taxed at different rates. Any gains on the sale of business property are reported on Form 4797, and the form is used to calculate the recapture of depreciation, which is treated as ordinary income. Additionally, Form 4797 is used to report involuntary conversions of business property due to theft or casualty, and the recapture of investment credit under certain circumstances.