Common questions for Form 4797 in ProSeries

Table of contents:

How to enter a disposition in Form 4797

These steps should only be followed if the property is not on an Asset Entry Worksheet. For more information, see here.

1. Press F6 to bring up Open Forms.
2. Type 97 to highlight Enterable 4797.
3. Select OK and enter a property description.
4. Select Create.
5. Find Part III - Gain From Disposition of Property Under Sections 1245, 1250, 1254, and 1255.
6. Fill in all appliable information in the designated fields.
   • This form has columns A-D for up to four properties. For more than four properties, repeat steps 1-3.

How does ProSeries recapture a section 179 expense when business use drops to less than 50%?

ProSeriesdoesn't automatically handle depreciation recapture.

To enter depreciation recapture:

1. Press F6 to bring up Open Forms.
2. Type 97 in the Find: field to highlight Enterable 4797.
3. Click OK to open the form.
4. Scroll down to Part IV - Recapture Amounts under Sections 179 and 280F(b)(2) When Business Use Drops to 50% or Less.
5. For (a) Section 179 Recapture, do the following:
   1. On line 33, column (a), enter the Section 179 expense deduction or depreciation allowable in prior years.
   2. On line 34, column (a), enter the Recomputed depreciation.
   3. Line 35 column(a) shows the Recapture amount. The recapture amount must be entered as "Other Income" on the same form or schedule the original deduction was taken.
      • Enter the Recapture amount on the appropriate Schedule C on line 5 -  Enter other income (not reported on 1099).
      • This amount will flow to line 6.
6. For (b) Section 280F(b)(2) do the following:
   1. On line 33, column (b), enter the Section 179 expense deduction or depreciation allowable in prior years.
   2. On line 34, column (b), enter the Recomputed depreciation that would have been allowable if the property hadn't been used more than 50% in a qualified business.
   3. Line 35 column (b) shows the Recapture amount (subtract line 34 from line 33). The recapture amount must be entered as "Other Income" on the same form or schedule the original deduction was taken.

Additional information

• The depreciation amount should also be recaptured on the Schedule or form it was originally taken. For example:
  • If the depreciation was originally taken on a Schedule C, the depreciation recapture amount needs to be entered as other income on the Schedule C, line 6.
  • For depreciation originally taken on Schedule E, the depreciation recapture amount needs to be entered on Schedule E, line 3 for income.
    • If you double-click line 3, you can attach a supporting statement to indicate depreciation recapture.
• Refer to IRS Pub. 946for more information.

How do I enter data on Form 4797, page 2, for assets sold that aren't entered on the Asset Entry Worksheet?

To enter assets that were disposed of, but not entered on an Asset Entry Worksheet, ProSeries provides an Enterable 4797, page 2.

Follow these steps to access the Enterable Form 4797, page 2:

1. Press F6 on your keyboard to bring up the Open Forms window.
2. Type "97" and press Enter to open the Enterable 4797.
3. Enter a description and select Create.
4. Enter the applicable information for Form 4797, page 2.

The Enterable 4797 won't have information flow into the form from other forms. This form is a standalone form that lets you to enter in the exact information you want. The resulting gain or loss will flow to the main Form 4797, page 1 and adjust all amounts accordingly.

Understanding the difference between page 1 and page 2 of Form 4797

Form 4797, Sales of Business Property, page 1, is used to report:

• Gains and losses on the sale of nondepreciable assets.
• Gains and losses on the sale of depreciable assets held one year or less.
• Losses on the sale of depreciable assets held more than one year.

Form 4797, Sales of Business Property, page 2, is used to report:

• Gains on the sale of business assets that are subject to depreciation recapture.

Additional popular support articles associated with Form 4797:

• Reporting Bulk Asset Sales in ProSeries
• How to dispose of a rental property with assets in ProSeries
• Disposition of a Schedule E Rental Property Which Has Been Converted to a Personal Residence
• Entering a home sale exclusion in ProSeries
• Completing a Like Kind Exchange in the 1040 return