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IRS.gov Website
Publication 544
taxmap/pubs/p544-019.htm#en_us_publink100072663

Form 4797(p38)

rule
Use Form 4797 to report: You can use Form 4797 with Form 1040, 1065, 1120, or 1120S.
taxmap/pubs/p544-019.htm#en_us_publink100072664

Section 1231 gains and losses.(p38)

rule
Show any section 1231 gains and losses in Part I. Carry a net gain to Schedule D (Form 1040) as a long-term capital gain. Carry a net loss to Part II of Form 4797 as an ordinary loss.
If you had any nonrecaptured net section 1231 losses from the preceding 5 tax years, reduce your net gain by those losses and report the amount of the reduction as an ordinary gain in Part II. Report any remaining gain on Schedule D (Form 1040). See Section 1231 Gains and Losses in chapter 3.
taxmap/pubs/p544-019.htm#en_us_publink100072665

Ordinary gains and losses.(p38)

rule
Show any ordinary gains and losses in Part II. This includes a net loss or a recapture of losses from prior years figured in Part I of Form 4797. It also includes ordinary gain figured in Part III.
taxmap/pubs/p544-019.htm#en_us_publink1000269653
Mark-to-market election. (p38)
If you made a mark-to-market election, you should report all gains and losses from trading as ordinary gains and losses in Part II of Form 4797, instead of as capital gains and losses on Form 8949 and Schedule D (Form 1040). See the Instructions for Form 4797. Also see Special Rules for Traders in Securities, in chapter 4 of Pub. 550.
taxmap/pubs/p544-019.htm#en_us_publink100072666

Ordinary income from depreciation.(p38)

rule
Figure the ordinary income from depreciation on personal property and additional depreciation on real property (as discussed in chapter 3) in Part III. Carry the ordinary income to Part II of Form 4797 as an ordinary gain. Carry any remaining gain to Part I as section 1231 gain, unless it is from a casualty or theft. Carry any remaining gain from a casualty or theft to Form 4684.
taxmap/pubs/p544-019.htm#TXMR6ebc2029

Disposition of depreciable property not used in trade or business. (p38)

rule
Generally, gain from the sale or exchange of depreciable property not used in a trade or business but held for investment or for use in a not-for-profit activity is capital gain. Generally, the gain is reported on Form 8949 and Schedule D. However, part of the gain on the sale or exchange of the depreciable property may have to be recaptured as ordinary income on Form 4797. Use Part III of Form 4797 to figure the amount of ordinary income recapture. The recapture amount is included on line 31 (and line 13) of Form 4797. See the instructions for Form 4797, Part III. If the total gain for the depreciable property is more than the recapture amount, the excess is reported on Form 8949 in Part I, if the transaction is short term, or Part II, if the transaction is long term. See the Instructions for Form 8949.
Generally, loss from the sale or exchange of depreciable property not used in a trade or business but held for investment or for use in a not-for-profit activity is a capital loss. Report the loss on Form 8949 in Part I (if the transaction is short term) or Part II (if the transaction is long term). If your capital losses are more than your capital gains, you can deduct the difference as a capital loss deduction (subject to capital loss limitations) even if you do not have ordinary income to offset it. See Treatment of Capital Losses, earlier. Also, see the Instructions for Form 8949 and the Instructions for Schedule D (Form 1040).