1031 Exchange News & Resources


1031 exchange:
IRS1031ExchangeForm4797

Specific Instructions

Table of Contents

To show losses, enclose figures in (parentheses).

If you disposed of property you acquired by inheritance, enter �INHERITED� in column (b) instead of the date you acquired the property.

Disposition by a Partnership or S Corporation of Section 179 Property

Partnerships (other than electing large partnerships) and S corporations that sell or otherwise dispose of property for which the section 179 expense deduction was previously claimed and passed through to the partners or shareholders must follow these instructions to report the transaction. Partners and shareholders who receive a Schedule K-1 showing such a disposition must also follow these instructions to report the transaction.

Partnerships and S corporations.   Partnerships and S corporations do not report these transactions on Form 4797, 4684, 6252, or 8824. Instead, all details of the sale or other disposition must be separately reported on Schedule K-1, including:

  • Description of the property.

  • Date the property was acquired and placed in service.

  • Date of the sale or other disposition of the property.

  • The partner's or shareholder's share of the gross sales price or amount realized.

  • The partner's or shareholder's share of the cost or other basis plus the expense of sale (reduced as explained in the instructions for Form 4797, line 21).

  • The partner's or shareholder's share of the depreciation allowed or allowable, determined as described in the instructions for Form 4797, line 22, but excluding the section 179 expense deduction.

  • The partner's or shareholder's share of the section 179 expense deduction (if any) passed through for the property and the partnership's tax year(s) in which the amount was passed through.

  • If the disposition is due to a casualty or theft, a statement indicating so, and any additional information needed by the partner or shareholder to complete Form 4684.

  • If the disposition was an installment sale made during the partnership's or S corporation's tax year reported using the installment method, any information needed by the partner or shareholder to complete Form 6252. The partnership or S corporation also must separately report the partner's or shareholder's share of all payments received for the property in the following tax years. (Installment payments received for sales made in prior tax years should be reported in the same manner used in the prior tax years.) See the instructions for Form 6252 for details.

  • If the disposition was a disposition of property given up in an exchange involving like-kind property made during the partnership's or S corporations's tax year, any information needed by the partner or shareholder to complete Form 8824.

  See the instructions for Schedule K (Form 1065 or 1120S) for more details.

Partners and S corporation shareholders.   If you receive a Schedule K-1 reporting such a transaction, you must report your share of the transaction on Form 4797, 4684, 6252, or 8824 (whether or not you were a partner or shareholder at the time the section 179 expense deduction was claimed). If you have a carryforward of unused section 179 expense deduction that includes section 179 expense deduction previously passed through to you for the disposed asset, you must reduce your carryforward by your share of the section 179 expense deduction shown on Schedule K-1 (or the amount attributable to that property included in your carryforward amount). See the worksheet on the next page to figure the amounts to report on Form 4797, 4684, 6252, or 8824, and to figure any reduction in your carryforward of unused section 179 expense deduction.

Line 1

Enter on line 1 the total gross proceeds from:

  • Sales or exchanges of real estate reported to you for 2004 on Form(s) 1099-S (or substitute statement) that you are including on line 2, 10, or 20 and

  • Sales of securities or commodities reported to you for 2004 on Forms 1099-B (or substitute statements) that you are including on line 10 because you are a trader with a mark-to-market election under section 475(f) in effect for the tax year. See Traders Who Made a Mark-To-Market Election on page 2 and the instructions for line 10 on page 5.


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