- Sale of Business Property and Nonbusiness Property
Sale of Business Property and Nonbusiness Property
What sales of business property should I report in the Sale of Business Property section?
Report your business property sales here only if you did not report the sale when you entered your business income and expenses.
If you reported all your sales of business property when you entered your business income and expenses, don't report anything here.
If you did sell business assets and didn't report the sale when you entered your business income and expenses, you can report the sale here if you haven't listed the property under assets because it was fully depreciated. If the asset is listed under your business expenses, return to that area of the program to report the sale of the asset.
Be sure to have all your records handy -- the amount you paid for your business asset, the sales price, and the depreciation you've taken through the years.
If you sold qualifying small business (section 1244) stock and had a loss, you can report up to $50,000 of your loss here. If you have more than $50,000 in losses, report the balance with your other investment gains and losses.
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What types of property sales should I report here?
Do not report sales of property that are part of a business, rental, royalty, or farm. Report those sales on the appropriate form or schedule related to the property.
Report the following sales:
- Nonrecaptured section 1231 losses: losses that have not been applied against gains in the last five years.
- Section 1244 small business stock losses
- Losses on certain farmland, oil or other mineral property, or conservation or reclamation property
How do I know if I have section 1231 losses not offset by gains?
Look at your 2006 Form 4797, lines 7 and 8. You have section 1231 losses if the form shows one of the following:
- Line 7 is a loss
- Line 7 is a gain, and line 7 minus line 8 is a negative number
If line 7 is a gain, but line 7 minus line 8 is a positive number, then you have no loss that wasn't offset.
Why do I have to transfer this income manually?
Because you didn't enter the sale directly on a business, farm, or rental property, TurboTax doesn't know which activity to report the income on. Perhaps this is because you no longer are in business or sold the rental.
Go to the activity and enter the income there. For example, if this sale relates to your business, go to your business schedule to enter the income. If you are no longer in business, open a new business schedule and enter the profit from your sale as if you were still in business.
What are some examples of nondepreciable asset sales?
This kind of sale includes:
- Section 1231 - dispositions of certain business property
- Section 1252 - dispositions of certain farm land
- Section 1254 - dispositions of certain oil, gas, geothermal, or other mineral property interests
- Section 1255 - disposition of certain property where you've received government cost-sharing under the Internal Revenue Code section 126
- Capital asset - dispositions of assets you used in your business that are capital assets such as inventory, property held primarily for sale to customers, or copyrights
- Ordinary income asset - disposition of business you've held, for example, for less than a year, accounts receiveable, or inventory
For more information on these types of property, obtain IRS Publication 544, Sales and Other Dispositions of Assets.
What is nondepreciable property?
Nondepreciable property is property you use in your business that you can't take a depreciation deduction for each year.
Examples of non-depreciable property include:
- Land
- Inventory
- Accounts receivable
- Partnership interests
- Livestock
- Oil, gas, and geothermal property
- Copyrights
