Instructions:

[L7] Partners and S corporation shareholders receive a
Schedule K-1 (Form 1065 or Form 1120-S), which
includes amounts that must be reported on Form 4797.
Following the Instructions for Schedule K-1, enter any
amounts from your Schedule K-1 (Form 1120-S), box 9, or
Schedule K-1 (Form 1065), box 10, in Part I of Form 4797.
If the amount from line 7 is a gain and you have
nonrecaptured section 1231 losses from prior years, see
the instructions for line 8, later. If the amount from line 7 is
a gain and you did not have nonrecaptured section 1231
losses from prior years, enter the gain from line 7 as a
long-term capital gain on the Schedule D for the return you
are filing.

[L8] Your nonrecaptured section 1231 losses are your net
section 1231 losses deducted during the 5 preceding tax
years that have not yet been applied against any net
section 1231 gain to determine how much net section
1231 gain is treated as ordinary income under this rule.
You had a net section 1231 loss if section 1231 losses
exceeded section 1231 gains. Gains are included only to
the extent taken into account in figuring gross income.
Losses are included only to the extent taken into account
in figuring taxable income except that the limitation on
capital losses does not apply.
Your net section 1231 gain on line 7 is treated as
ordinary income to the extent of your nonrecaptured
section 1231 losses. See the example in Instructions

[L9] For recordkeeping purposes, if line 9 is zero, the amount
on line 7 is the amount of net section 1231 loss recaptured
in 2024. If line 9 is more than zero, you have recaptured all
of your net section 1231 losses from prior years.
If line 9 is more than zero, enter the amount from line 8
on line 12. Enter the gain from line 9 as a long-term capital
gain on the Schedule D for the return you are filing.

[L10] Report on line 10 ordinary gains and losses, not included
on lines 11 through 16, including gains and losses from
property held 1 year or less.
If you receive ordinary income from a sale or other
disposition of property and deducted the cost of the
property under the tangible property de minimis safe
harbor, report the income on line 10.
Deduct the loss from a qualifying abandonment of
business or investment property on line 10. See
Abandonments in Pub. 544 for more information.

[L18a] You must complete this line if there is a gain on Form
4797, line 3; a loss on Form 4797, line 11; and a loss on Form 4684, line 35, column (b)(ii). Enter on this line the
smaller of the loss on Form 4797, line 11, or the loss on
Form 4684, line 35, column (b)(ii). To figure which loss is
smaller, treat both losses as positive numbers. Enter the
loss from income-producing property on Schedule A
(Form 1040), line 16. Identify it as from “Form 4797,
line 18a.” Do not include any loss from property used as
an employee.

[L20] The gross sales price includes money, the FMV of other
property received, and any existing mortgage or other
debt the buyer assumes or takes the property subject to.
For casualty or theft gains, include insurance or other
reimbursement you received or expect to receive for each
item. Include on this line your insurance coverage,
whether or not you are submitting a claim for
reimbursement.
For section 1255 property disposed of in a sale,
exchange, or involuntary conversion, enter the amount
realized. For section 1255 property disposed of in any
other way, enter the FMV.

[L21] Reduce the cost or other basis of the property by the
amount of any enhanced oil recovery credit or disabled
access credit. However, do not adjust the cost or other
basis for any of the items taken into account on line 22.

[L22] Follow the steps in the instructions

[L23] For section 1255 property, enter the adjusted basis of the
section 126 property disposed of.

[L25a] See Instruction details

[L26a] See Instruction details

[L27b] Enter 100% of line 27a on line 27b except as follows:
• 80% if the farmland was disposed of within the 6th year after it was acquired.
• 60% if disposed of within the 7th year.
• 40% if disposed of within the 8th year.
• 20% if disposed of within the 9th year.

[L28a] If the property was placed in service before 1987, enter
the total expenses after 1975 that:
• Were deducted by the taxpayer or any other person as
intangible drilling and development costs under section
263(c) (except previously expensed mining costs that
were included in income upon reaching the producing
state), and
• Would have been reflected in the adjusted basis of the
property if they had not been deducted.
If the property was placed in service after 1986, enter
the total expenses that:
• Were deducted under section 263, 616, or 617 by the
taxpayer or any other person; and
• But for such deduction, would have been included in the
basis of the property; plus
• The deduction under section 611 that reduced the
adjusted basis of such property.
If you disposed of a portion of section 1254 property or
an undivided interest in it, see section 1254(a)(2).

[L29a] Use 100% if the property is disposed of less than 10 years
after receipt of payments excluded from income. Use
100% minus 10% for each year, or part of a year, that the property was held over 10 years after receipt of the
excluded payments. Use zero if 20 years or more.
