Question

Please fill out an IRS 2017 Tax Form 4797: Sale of Business Property based on the following information: (Only parts that you can fill out with this information)

JERRY is married filing jointly.

1. Sold stock in XYZ INC for 0, which was worthless. Jerry had previously invested $550,000 in XYZ 5 years earlier. Good news however is that XYZ made a section 1244 election.

2. Jerry is self employed and has a plushy toy business. In June 2017, the company sold one of its older trucks for $10,00. It was bought in April 2014 for $15,000 with MACRS depreciation.

Answer 1

1. Stock: Report the loss on stock upto a max amount of $100000 (as filled jointly) in line 10: Ordinary gains and losses not included on lines 11 through 16 (include property held 1 year or less).

2. Loss on sale will be reported in line 2:

This will not be reported in Part III as there is a net loss on the asset. Disclosure under part III is made only in case of a profit on sale.

For depreciation MACRS 5-yr scedule is followed:

Year	Depreciation rate	Depreciation
2014-15	20%	3,000
2015-16	32%	4,800
2016-17	19.20%	2,880
2017-18 (upto June 17)	11.52%	431
		11,111

Loss on sale = Sale price+ depreciation - cost basis = 1000+11,111-15000 = 2889 loss.