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Form4797Department of the TreasuryInternal Revenue ServiceSales of Business PropertyOMB No. 1545-0184Attach to your tax return.Go to www.irs.gov/Form4797 for instructions and the latest information.aaAttachmentSequence No.Enter the gross proceeds from sales or exchanges reported to you for 2019 on Form(s) 1099-B or 1099-S (orsubstitute statement) that you are including on line 2, 10, or 20. See instructions . . . . . . . . . . .Part I1Sales or Exchanges of Property Used in a Trade or Business and Involuntary Conversions From OtherThan Casualty or Theft—Most Property Held More Than 1 Year (see instructions)(a) Descriptionof property227Identifying numberName(s) shown on return12019(Also Involuntary Conversions and Recapture AmountsUnder Sections 179 and 280F(b)(2))(b) Date acquired(mo., day, yr.)(c) Date sold(mo., day, yr.)(e) Depreciationallowed orallowable sinceacquisition(d) Grosssales price(f) Cost or otherbasis, plusimprovements andexpense of sale34Gain, if any, from Form 4684, line 39 . . . . . . . . . . .Section 1231 gain from installment sales from Form 6252, line 26 or 37 .34567Section 1231 gain or (loss) from like-kind exchanges from Form 8824 . . . . . . . .Gain, if any, from line 32, from other than casualty or theft. . . . . . . . . . .Combine lines 2 through 6. Enter the gain or (loss) here and on the appropriate line as follows .567.(g) Gain or (loss)Subtract (f) from thesum of (d) and (e)Partnerships and S corporations. Report the gain or (loss) following the instructions for Form 1065, Schedule K,line 10, or Form 1120-S, Schedule K, line 9. Skip lines 8, 9, 11, and 12 below.89Individuals, partners, S corporation shareholders, and all others. If line 7 is zero or a loss, enter the amount fromline 7 on line 11 below and skip lines 8 and 9. If line 7 is a gain and you didn’t have any prior year section 1231losses, or they were recaptured in an earlier year, enter the gain from line 7 as a long-term capital gain on theSchedule D filed with your return and skip lines 8, 9, 11, and 12 below.Nonrecaptured net section 1231 losses from prior years. See instructions . . . . . . . . . . . . .8Subtract line 8 from line 7. If zero or less, enter -0-. If line 9 is zero, enter the gain from line 7 on line 12 below. If line9 is more than zero, enter the amount from line 8 on line 12 below and enter the gain from line 9 as a long-termcapital gain on the Schedule D filed with your return. See instructions . . . . . . . . . . . . . .9Part IIOrdinary Gains and Losses (see instructions)10Ordinary gains and losses not included on lines 11 through 16 (include property held 1 year or less):1112Loss, if any, from line 7 . . . . . . . . . . .Gain, if any, from line 7 or amount from line 8, if applicable.11 (12131415Gain, if any, from line 31 . . . . . . . . . . . . .Net gain or (loss) from Form 4684, lines 31 and 38a . . . . .Ordinary gain from installment sales from Form 6252, line 25 or 36 .1314151617Ordinary gain or (loss) from like-kind exchanges from Form 8824Combine lines 10 through 16 . . . . . . . . . . .161718For all except individual returns, enter the amount from line 17 on the appropriate line of your return and skip lines aand b below. For individual returns, complete lines a and b below.a If the loss on line 11 includes a loss from Form 4684, line 35, column (b)(ii), enter that part of the loss here. Enter the lossfrom income-producing property on Schedule A (Form 1040 or Form 1040-SR), line 16. (Do not include any loss onproperty used as an employee.) Identify as from “Form 4797, line 18a.” See instructions . . . . . . . . . .18ab Redetermine the gain or (loss) on line 17 excluding the loss, if any, on line 18a. Enter here and on Schedule 1(Form 1040 or Form 1040-SR), Part I, line 4 . . . . . . . . . . . . . . . . . . . . . .18bFor Paperwork Reduction Act Notice, see separate instructions.Cat. No. 13086I)Form 4797 (2019)
Page 2Form 4797 (2019)Part III19Gain From Disposition of Property Under Sections 1245, 1250, 1252, 1254, and 1255(see instructions)(a) Description of section 1245, 1250, 1252, 1254, or 1255 property:(b) Date acquired(mo., day, yr.)(c) Date sold(mo., day, yr.)Property CProperty DABCDThese columns relate to the properties on lines 19A through 19D. a2021222324252627.20212223.24.25a25bGross sales price (Note: See line 1 before completing.)Cost or other basis plus expense of sale . . . .Depreciation (or depletion) allowed or allowable . .Adjusted basis. Subtract line 22 from line 21. . .Total gain. Subtract line 23 from line 20 . . .If section 1245 property:a Depreciation allowed or allowable from line 22 .b Enter the smaller of line 24 or 25a. . . . .If section 1250 property: If straight line depreciation was used,enter -0- on line 26g, except for a corporation subject to section 291.a Additional depreciation after 1975. See instructions .26ab Applicable percentage multiplied by the smaller of line24 or line 26a. See instructions. . . . . . . .26bc Subtract line 26a from line 24. If residential rental propertyor line 24 isn’t more than line 26a, skip lines 26d and 26ed Additional depreciation after 1969 and before 1976. .e Enter the smaller of line 26c or 26d . . . . . .f Section 291 amount (corporations only) . . . . .g Add lines 26b, 26e, and 26f. . . . . . . .26c26d26e26f26gProperty BIf section 1252 property: Skip this section if you didn’tdispose of farmland or if this form is being completedfor a partnership.a Soil, water, and land clearing expenses . . . . .b Line 27a multiplied by applicable percentage. See instructionsc Enter the smaller of line 24 or 27b . . . . . .28 If section 1254 property:a Intangible drilling and development costs, expendituresfor development of mines and other natural deposits,mining exploration costs, and depletion. See instructionsb Enter the smaller of line 24 or 28a. . . . . . .29Property A27a27b27c28a28bIf section 1255 property:a Applicable percentage of payments excluded fromincome under section 126. See instructions . . .b Enter the smaller of line 24 or 29a. See instructions.29a29bSummary of Part III Gains. Complete property columns A through D through line 29b before going to line 30.3031Total gains for all properties. Add property columns A through D, line 24 . . . . . . . .Add property columns A through D, lines 25b, 26g, 27c, 28b, and 29b. Enter here and on line 13 .32Subtract line 31 from line 30. Enter the portion from casualty or theft on Form 4684, line 33. Enter the portion fromother than casualty or theft on Form 4797, line 6 . . . . . . . . . . . . . . . . . . . .Part IV.303132Recapture Amounts Under Sections 179 and 280F(b)(2) When Business Use Drops to 50% or Less(see instructions)(a) Section17933Section 179 expense deduction or depreciation allowable in prior years.3435Recomputed depreciation. See instructions . . . . . . . . . . . . . .Recapture amount. Subtract line 34 from line 33. See the instructions for where to report.333435(b) Section280F(b)(2)Form 4797 (2019)
2019Department of the TreasuryInternal Revenue ServiceInstructions for Form 4797Sales of Business Property(Also Involuntary Conversions and Recapture AmountsUnder Sections 179 and 280F(b)(2))Section references are to the Internal RevenueCode unless otherwise noted.Future DevelopmentsFor the latest information aboutdevelopments related to Form 4797 andits instructions, such as legislationenacted after they were published, go toIRS.gov/Form4797.General InstructionsPurpose of FormUse Form 4797 to report: The sale or exchange of:1. Real property used in your tradeor business;2. Depreciable and amortizabletangible property used in your trade orbusiness (however, see Disposition ofDepreciable Property Not Used in Tradeor Business, later);3. Oil, gas, geothermal, or othermineral properties; and4. Section 126 property. The involuntary conversion (fromother than casualty or theft) of propertyused in your trade or business andcapital assets held for more than 1 yearin connection with a trade or business ora transaction entered into for profit(however, see Disposition ofDepreciable Property Not Used in Tradeor Business, later). The disposition of noncapital assets(other than inventory or property heldprimarily for sale to customers in theordinary course of your trade orbusiness). The disposition of capital assets notreported on Schedule D. The gain or loss (including anyrelated recapture) for partners and Scorporation shareholders from certainsection 179 property dispositions bypartnerships and S corporations. The computation of recaptureamounts under sections 179 and280F(b)(2) when the business use ofsection 179 or listed property decreasesto 50% or less. Gains or losses treated as ordinarygains or losses, if you are a trader inJan 08, 2020securities or commodities and made amark-to-market election under section475(f).Other Forms You MayHave To File Use Form 4684, Casualties andThefts, to report involuntary conversionsfrom casualties and thefts. Use Form 6252, Installment SaleIncome, to report the sale of propertyunder the installment method. Use Form 8824, Like-KindExchanges, to report exchanges ofqualifying business or investment realproperty for real property of a like kind.For exchanges of real property used in atrade or business (and other noncapitalassets), enter the gain or (loss) fromForm 8824, if any, on Form 4797, line 5or line 16. If you sold property on which youclaimed investment credit, see Form4255, Recapture of Investment Credit,and its instructions to find out if youmust recapture some or all of the credit. Use Form 8949, Sales and OtherDispositions of Capital Assets, to reportthe sale or exchange of capital assetsnot reported on another form orschedule; gains from involuntaryWhere To Make First Entry for Certain ItemsReported on This Form(b)Held 1 yearor less(a)Type of property12345678Depreciable tangible trade or business property:a Sold or exchanged at a gain . . . . . . . . . . . .b Sold or exchanged at a loss . . . . . . . . . . . .Depreciable real trade or business property:a Sold or exchanged at a gain . . . . . . . . . . .b Sold or exchanged at a loss . . . . . . . . . . . .Farmland held less than 10 years upon whichsoil or water expenses were deducted:a Sold at a gain . . . . . . . . . . . . . . . . . . . . .b Sold at a loss . . . . . . . . . . . . . . . . . . . . .Real or tangible trade or business propertywhich was deducted under the de minimis safeharborAll other farmland used in a trade or businessDisposition of cost-sharing payment propertydescribed in section 126(c)Held morethan 1 yearPart IIPart IIPart III (1245)Part IPart IIPart IIPart III (1250)Part IPart IIPart IIPart IIPart III (1252)Part IPart IIPart IIPart IPart IIPart III (1255)Cattle and horses used in a trade or businessfor draft, breeding, dairy, or sporting purposes:Held lessthan 24monthsHeld 24monthsor moreabcPart IIPart IIPart IIPart III (1245)Part IPart ILivestock other than cattle and horses used in atrade or business for draft, breeding, dairy, orsporting purposes:Held lessthan 12monthsHeld 12monthsor moreabcPart IIPart IIPart IIPart III (1245)Part IPart ISold at a gain . . . . . . . . . . . . . . . .Sold at a loss . . . . . . . . . . . . . . . .Raised cattle and horses sold at a gainSold at a gain . . . . . . . . . . .Sold at a loss . . . . . . . . . .Raised livestock sold at a gainCat. No. 13087T. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
conversions (other than casualty ortheft) of capital assets not used in yourtrade or business; and nonbusiness baddebts. However, see Disposition ofDepreciable Property Not Used in Tradeor Business, later. Use the applicable Schedule D,Capital Gains and Losses, for the returnyou are filing to figure the overall gain orloss from transactions reported on Form8949 and to report transactions youdon’t have to report on Form 8949. Seethe Instructions for Form 8949 and theinstructions for the applicableSchedule D.Additional information. See Pub.544, Sales and Other Dispositions ofAssets. Also, see Pub. 550, InvestmentIncome and Expenses (IncludingCapital Gains and Losses).Special RulesAt-Risk RulesIf you report a loss on an asset used inan activity for which you are not at risk,in whole or in part, see the Instructionsfor Form 6198, At-Risk Limitations. Also,see Pub. 925, Passive Activity andAt-Risk Rules. Losses from passiveactivities are subject first to the at-riskrules and then to the passive activityrules.Depreciable Property and OtherProperty Disposed of in theSame TransactionIf you disposed of both depreciableproperty and other property (forexample, a building and land) in thesame transaction and realized a gain,you must allocate the amount realizedbetween the two types of propertybased on their respective fair marketvalues (FMVs) to figure the part of thegain to be recaptured as ordinaryincome because of depreciation. Thedisposition of each type of property isreported separately in the appropriatepart of Form 4797 (for example, forproperty held more than 1 year, reportthe sale of a building in Part III and landin Part I).Disposition of DepreciableProperty Not Used in Trade orBusinessGenerally, gain from the sale orexchange of depreciable property notused in a trade or business but held forinvestment or for use in a not-for-profitactivity is capital gain. Generally, thegain is reported on Form 8949 andSchedule D. However, part of the gainon the sale or exchange of thedepreciable property may have to berecaptured as ordinary income on Form4797. Use Part III of Form 4797 to figurethe amount of ordinary incomerecapture. The recapture amount isincluded on line 31 (and line 13) of Form4797. See the Instructions for Form4797, Part III. If the total gain for thedepreciable property is more than therecapture amount, the excess isreported on Form 8949. On Form 8949,enter “From Form 4797” in column (a) ofPart I (if the transaction is short term) orPart II (if the transaction is long term),and skip columns (b) and (c). In column(d), enter the excess of the total gainover the recapture amount. Leavecolumns (e) through (g) blank andcomplete column (h). If you invested thisgain into a Qualified Opportunity Fundand intend to elect the temporarydeferral of the gain, then see theInstructions for Form 8949, theinstructions for Form 8997, and theinstructions for the applicableSchedule D.Elective partial dispositions. If youelect to recognize a partial disposition ofa MACRS asset, report the gain or loss(if any) on Form 4797, Part I, II, or III, asapplicable, and include the words“Partial Disposition Election” in thedescription of the partially disposedasset. See the instructions for Parts I, II,and III. For more information on thedisposition of MACRS assets, seeRegulations section 1.168(i)-8.Generally, loss from the sale orexchange of depreciable property notused in a trade or business but held forinvestment or for use in a not-for-profitactivity is a capital loss. Report the losson Form 8949 in Part I (if the transactionis short term) or Part II (if the transactionis long term). You can deduct capitallosses up to the amount of your capitalgains. In the case of taxpayers otherthan corporations, you can also deductthe lower of: 3,000 ( 1,500 if you are amarried individual filing a separatereturn), or the excess of such lossesover such gains. See the Instructions forForm 8949 and the instructions forSchedule D (Form 1040 or 1040-SR).Disposition of Assets ThatConstitute a Trade or BusinessPartial Dispositions of MACRSPropertyYou may elect to recognize a partialdisposition of a Modified AcceleratedCost Recovery System (MACRS) asset,and report the gain, loss, or otherdeduction on a timely filed, includingextensions, federal tax return for theyear of the disposition. In some cases,however, you are required to report thegain or loss on the partial disposition ofa MACRS asset (see Required partialdispositions below). MACRS assetsinclude buildings (and their structuralcomponents) and other tangibledepreciable property placed in serviceafter 1986 that is used in a trade orbusiness or for the production ofincome.For more information on partialdispositions of MACRS property, seeRegulations section 1.168(i)-8(d).-2-Required partial dispositions.Report the gain or loss (if any) on thefollowing partial dispositions of MACRSassets on Form 4797, Part I, II, or III, asapplicable. Sale of a portion of a MACRS asset. Involuntary conversion of a portion ofa MACRS asset other than from acasualty or theft. Like-kind exchange of a portion of aMACRS asset (Form 4797, line 5 or 16).See the instructions for Parts I, II, andIII. Also, see Other Forms You MayHave To File, earlier.If you sell a group of assets that makeup a trade or business and the buyer'sbases in the assets are determinedwholly by the amount paid for theassets, both you and the buyergenerally must allocate the total salesprice to the assets transferred. FileForm 8594, Asset AcquisitionStatement, to report the sale. See Pub.544 for more details on the sale ofbusiness assets.Installment SalesIf you sold property at a gain and youwill receive a payment in a tax year afterthe year of sale, you generally mustreport the sale on the installmentmethod unless you elect not to do so.Use Form 6252 to report the sale onthe installment method. Also use Form6252 to report any payment receivedduring your 2019 tax year from a salemade in an earlier year that youreported on the installment method.Enter gain from the installment sale onForm 4797, line 4 or line 15, asapplicable. See the Instructions forForm 6252.To elect out of the installmentmethod, report the full amount of thegain on a timely filed return (includingextensions). If you timely filed your taxreturn without making the election, youcan still make the election by filing anamended return within 6 months of thedue date of your return (excludingextensions). Write “Filed pursuant to
section 301.9100-2” at the top of theamended return.For a detailed discussion ofinstallment sales, see Pub. 537,Installment Sales.Traders Who Made aMark-To-Market ElectionA trader in securities or commoditiesmay elect under section 475(f) to usethe mark-to-market method to accountfor securities or commodities held inconnection with a trading business.Under this method of accounting, anysecurity or commodity held at the end ofthe tax year is treated as sold at its FMVon the last business day of that year.Unless you are a new taxpayer, theelection must be made by the due date(not including extensions) of the taxreturn for the year prior to the year forwhich the election becomes effective.If you are a trader in securities orcommodities with a mark-to-marketelection under section 475(f) in effect forthe tax year, the following special rulesapply. Gains and losses from all securitiesor commodities held in connection withyour trading business (including thosemarked to market) are treated asordinary income and losses, instead ofcapital gains and losses. As a result, thelower capital gain tax rates and thelimitation on capital losses don’t apply. The gain or loss from each security orcommodity held in connection with yourtrading business (including thosemarked to market) is reported on Form4797, Part II, line 10. See theinstructions for line 10. The wash sale rule does not apply tosecurities or commodities held inconnection with your trading business.For details on the mark-to-marketelection for traders and how to make theelection, see section 475(f). Also seePub. 550.Sale of Home Used forBusinessIf you sold property that was your homeand you also used it for business, youmay need to use Form 4797 to reportthe sale of the part used for business (orthe sale of the entire property if usedentirely for business). Gain or loss onthe sale of the home may be a capitalgain or loss or an ordinary gain or loss.Any gain on the personal part of theproperty is a capital gain. You cannotdeduct a loss on the personal part. Anygain or loss on the part of the homeused for business is an ordinary gain orloss, as applicable, reportable on Form4797. Any gain or loss on the partproducing income for which theunderlying activity does not rise to thelevel of a trade or business is a capitalgain or loss, as applicable. SeeDisposition of Depreciable Property NotUsed in Trade or Business, earlier. Formore details, see Pub. 544. Also, seePub. 523, Selling Your Home.Exclusion of gain on sale of homeused for business. You may be ableto exclude part or all of the gain figuredon Form 4797 if the property sold wasused for business and was also ownedand used as your principal residenceduring the 5-year period ending on thedate of the sale. During that 5-yearperiod, you must have owned and usedthe property as your personal residencefor 2 or more years. However, theexclusion may not apply to the part ofthe gain that is allocated to any periodafter December 31, 2008, during whichthe property was not used as yourprincipal residence.If the property was held more than 1year after you converted it to businessuse, complete Part III to figure theamount of the gain. Do not take theexclusion into account when figuring thegain on line 24. If line 22 includesdepreciation for periods after May 6,1997, you cannot exclude gain to theextent of that depreciation. On Part I,line 2, write “Section 121 exclusion,”and enter the amount of the exclusionas a (loss) in column (g).If the property was held for 1 year orless after you converted it to businessuse, report the sale and the amount ofthe exclusion, if any, in a similar manneron Part II, line 10.For details and exceptions includinghow to figure gain on the sale of a homeused for business and the amount of theexclusion, see section 121 and Pub.523.Involuntary Conversion ofPropertyYou may not have to pay tax on a gainfrom an involuntary or compulsoryconversion of property. See Pub. 544for details.Passive Loss LimitationsIf you have an overall loss from passiveactivities and you report a loss on anasset used in a passive activity, useForm 8582, Passive Activity LossLimitations, or Form 8810, CorporatePassive Activity Loss and CreditLimitations, as applicable, to see how-3-much loss is allowed before entering iton Form 4797.You cannot claim unused passiveactivity credits when you dispose ofyour interest in an activity. However, ifyou dispose of your entire interest in anactivity, you may elect to increase thebasis of the credit property by theoriginal basis reduction of the propertyto the extent that the credit has not beenallowed because of the passive activityrules. Make the election on Form8582-CR, Passive Activity CreditLimitations, or Form 8810, asapplicable. No basis adjustment may beelected on a partial disposition of yourinterest in an activity.Recapture of PreproductiveExpensesIf you elect under section 263A(d)(3) notto use the uniform capitalization rules ofsection 263A, any plant that youproduce is treated as section 1245property. For dispositions of plantsreportable on Form 4797, enter therecapture amount taxed as ordinaryincome on Part III, line 22. SeeDisposition of plants in chapter 9 of Pub.225, Farmer's Tax Guide, for details.Section 197(f)(9)(B)(ii) ElectionIf you made the election under section197(f)(9)(B)(ii) to recognize gain on thedisposition of a section 197 intangibleand to pay a tax on that gain at thehighest tax rate, include the additionaltax on Form 1040 or 1040-SR, line 12a(or the appropriate line of other incometax returns). Check box 3 and enter“197” and the tax in the space next tothat box. The additional tax is theamount that, when added to any otherincome tax on the gain, equals the gainmultiplied by the highest tax rate.Deferral of Gain Invested in aQualified Opportunity FundIf you realized gain from an actual ordeemed sale or exchange with anunrelated person and, during the180-day period beginning on the datethe gain is realized, you invested anyportion of the gain in a QualifiedOpportunity Fund (QOF), then you maybe able to elect to temporarily defersuch eligible capital gain that wouldotherwise be includible in the current taxyear’s income. If you make the election,the eligible capital gain is included intaxable income only to the extent, if any,the amount of realized gain exceeds theaggregate amount invested in a QOFduring the 180-day period.A taxpayer may elect to temporarilydefer a qualified section 1231 gain
(gains derived from the sale of propertyused in a trade or business, includinggains from installment sales andlike-kind exchanges) by investing theamount of the eligible gain into a QOF.Qualified section 1231 gains are eligibleto be invested into a QOF to the extentthe section 1231 gain exceeds anyamount that is treated as ordinaryincome due to depreciation recapture asrequired by sections 1245 and 1250.Sections 1245 and 1250 gain may notbe deferred into a QOF. For moreinformation, see section 1400Z-2 and itsregulations.How to report. Report the gainincluding any depreciation recapturerequired by sections 1245 and 1250 asit otherwise would be reported if youwere not making the election. Then onForm 4797, line 2, report the qualifiedsection 1231 gains you are electing todefer as a result of an investment into aQOF within 180 days of the date sold. Ifyou are reporting the sale directly onForm 4797, line 2, use the line directlybelow the line on which you reported thesale. In column (a), identify the section1231 gains invested into a QOF as“QOF investment to Form 8949”;columns (b), (c), (d), (e), and (f) willremain blank. Report the amount ofsection 1231 gains invested into a QOFas a negative amount (in parentheses)in column (g). For example, if a taxpayerrealizes 300,000 of section 1231 gainsin a tax year but chooses to defer 75,000 of section 1231 gains byinvesting those gains into a QOF within180 days of the date of sale, thetaxpayer would write “QOF investmentto Form 8949” in column (a) and enter( 75,000) in column (g).Similarly, if the taxpayer disposed ofan investment in a QOF during the taxyear triggering recognition of section1231 deferred gains, the taxpayershould report the gain on a separate rowin line 2, write “QOF inclusion fromsection 1231 gains” in column (a), andreport the 75,000 of previouslydeferred and currently recognizablesection 1231 gains as a positive numberin column (g).Make the election for the deferredamount invested in a QOF on Form8949. See the Instructions for Form8949. If you held a qualified investmentin a QOF at any time during the year,you must file your return with Form8997, Initial and Annual Statement ofQualified Opportunity Fund (QOF)Investments, attached. See theinstructions for Form 8997. For moreinformation about QOFs, see IRS.gov/Ozfaqs.Rollover of Gain FromEmpowerment Zone AssetsIf you sold a qualified empowermentzone asset held for more than one year,you may be able to elect to postponepart or all of the gain that you wouldotherwise include on Form 4797, Part I.See section 1397B for details.How to report. If applicable, report theentire gain realized from the sale as youotherwise would without regard to theelection. On Form 4797, line 2, enter"Section 1397B Rollover" in column (a)and enter as a (loss) in column (g) theamount of gain included on Form 4797that you are electing to postpone. If youare reporting the sale directly on Form4797, line 2, use the line directly belowthe line on which you reported the sale.Exclusion of Gain From Sale ofDC Zone AssetsIf you sold or exchanged a District ofColumbia Enterprise Zone (DC Zone)asset that you acquired after 1997 andbefore 2012, and held for more than 5years, you may be able to exclude theamount of “qualified capital gain.” Thequalified gain is, generally, any gainrecognized in a trade or business thatyou would otherwise include on Form4797, Part I. This exclusion also appliesto an interest in, or property of, certainbusinesses operating in the District ofColumbia.DC Zone asset. A DC Zone asset isany of the following. DC Zone business stock. DC Zone partnership interest. DC Zone business property.Qualified capital gain. The qualifiedcapital gain is any gain recognized onthe sale or exchange of a DC Zoneasset that is a capital asset or propertyused in a trade or business. It does notinclude any of the following gain: Gain treated as ordinary incomeunder section 1245; Gain treated as unrecaptured section1250 gain. The section 1250 gain mustbe figured as if it applied to alldepreciation rather than the additionaldepreciation; Gain attributable to real property, oran intangible asset, which is not anintegral part of a DC Zone business; Gain from a related-party transaction.See Sales and Exchanges BetweenRelated Persons in chapter 2 of Pub.544; and Gain attributable to periods afterDecember 31, 2016.-4-See section 1400B (as in effectbefore its repeal) for more details andspecial rules.How to report. If applicable, report theentire gain realized from the sale orexchange as you otherwise wouldwithout regard to the exclusion. Toreport the exclusion, enter “DC ZoneAsset Exclusion” on Form 4797, line 2,column (a), and enter as a (loss) incolumn (g) the amount of the exclusionthat offsets the gain reported in Part I,line 6.Any unrecaptured section 1250gain is not qualified capital gain.CAUTION Identify the amount of gain thatis unrecaptured section 1250 gain andreport it on the Schedule D for the returnyou are filing.!Exclusion of Gain FromQualified Community AssetsIf you sold or exchanged a qualifiedcommunity asset acquired after 2001and before 2010, you may be able toexclude the “qualified capital gain.” Thequalified gain is, generally, any gainrecognized in a trade or business thatyou would otherwise include on Form4797, Part I. This exclusion also appliesto an interest in, or property of, certainrenewal community businesses. Seesections
qualifying business or investment real property for real property of a like kind. For exchanges of real property used in a trade or business (and other noncapital assets), enter the gain or (loss) from Form 8824, if any, on Form 4797, line 5 or line 16. If you sold property on which you claimed investment credit, see Form
