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The type and rule above prints on all proofs including departmental reproduction proofs. MUST be removed before printing.
the amount you receive for the property (includ- Note. Although the discussions in this publi- Useful Items
ing cash, the fair market value of other property, cation refer mainly to individuals, many of the You may want to see:
and any assumed liability). Corporations, part- rules discussed also apply to taxpayers other
nerships, trusts, and estates may also have to than individuals. However, the rules for property Publication
withhold on certain U.S. real property interests held for personal use will usually not apply to
they distribute to you. You must report these taxpayers other than individuals. 523 523 Selling Your Home
dispositions and distributions and any income 537 537 Installment Sales
tax withheld on your U.S. income tax return. Comments and suggestions. We welcome
For more information on dispositions of U.S. your comments about this publication and sug- 547 547 Casualties, Disasters, and Thefts
real property interests, see Pub. 519, U.S. Tax gestions for future editions. 550 550 Investment Income and Expenses
Guide for Aliens. Also, see Pub. 515, Withhold- You can send us comments through
ing of Tax on Nonresident Aliens and Foreign IRS.gov/FormComments. Or, you can write to: 551 551 Basis of Assets
Entities. 908 908 Bankruptcy Tax Guide
Foreign source income. If you are a U.S. citi- Internal Revenue Service
Tax Forms and Publications
zen with income from dispositions of property 1111 Constitution Ave. NW, IR-6526 4681 4681 Canceled Debts, Foreclosures,
outside the United States (foreign income), you Washington, DC 20224 Repossessions, and Abandonments
must report all such income on your tax return
unless it is exempt from U.S. law. This is true Form (and Instructions)
whether you reside inside or outside the United Although we can’t respond individually to Schedule D (Form 1040) Schedule D (Form 1040) Capital Gains
States and whether or not you receive a Form each comment received, we do appreciate your and Losses
1099 from the foreign payor. feedback and will consider your comments and
Photographs of missing children. The Inter- suggestions as we revise our tax forms, instruc- 1040 1040 U.S. Individual Income Tax Return
tions, and publications. Don’t send tax ques-
nal Revenue Service is a proud partner with the tions, tax returns, or payments to the above ad- 1040-X 1040-X Amended U.S. Individual Income
National Center for Missing & Exploited dress. Tax Return
Children® (NCMEC). Photographs of missing
children selected by the Center may appear in Getting answers to your tax questions. 1099-A 1099-A Acquisition or Abandonment of
this publication on pages that would otherwise If you have a tax question not answered by this Secured Property
be blank. You can help bring these children publication or the How To Get Tax Help section 1099-C 1099-C Cancellation of Debt
home by looking at the photographs and calling at the end of this publication, go to the IRS In-
800-THE-LOST (800-843-5678) if you recog- teractive Tax Assistant page at IRS.gov/ 4797 4797 Sales of Business Property
nize a child. Help/ITA where you can find topics by using the 8824 8824 Like-Kind Exchanges
search feature or viewing the categories listed.
Introduction Getting tax forms, instructions, and pub- 8949 Capital Assets
8949 Sales and Other Dispositions of
You dispose of property when any of the follow- lications. Go to IRS.gov/Forms to download See How To Get Tax Help for information about
current and prior-year forms, instructions, and
ing occur. publications. getting publications and forms.
• You sell property.
• You exchange property for other property. Ordering tax forms, instructions, and
• Your property is condemned or disposed publications. Go to IRS.gov/OrderForms to Sales and Exchanges
of under threat of condemnation. order current forms, instructions, and publica-
• Your property is repossessed. tions; call 800-829-3676 to order prior-year
• You abandon property. forms and instructions. The IRS will process A sale is a transfer of property for money or a
• You give property away. your order for forms and publications as soon mortgage, note, or other promise to pay money.
An exchange is a transfer of property for other
This publication explains the tax rules that as possible. Do not resubmit requests you’ve property or services. Property sold or ex-
apply when you dispose of property, including already sent us. You can get forms and publica- changed may include the sale of a portion of a
when you dispose of only a portion of certain tions faster online. Modified Accelerated Cost Recovery System
property. It discusses the following topics. (MACRS) asset (discussed later).
• How to figure a gain or loss on the sale, ex-
change, and other disposition of property. The following discussions describe the
• Whether your gain or loss is ordinary or kinds of transactions that are treated as sales or
capital. exchanges and explain how to figure gain or
• How to treat your gain or loss when you 1. loss.
dispose of business property.
• How to report a gain or loss on your tax re- Sale or lease. Some agreements that seem to
turn. be leases may really be conditional sales con-
This publication also explains whether your Gain or Loss tracts. The intention of the parties to the agree-
gain is taxable or your loss is deductible. ment can help you distinguish between a sale
and a lease.
This publication does not discuss certain
transactions covered in other IRS publications. Topics There is no test or group of tests to prove
These include the following. This chapter discusses: what the parties intended when they made the
• Most transactions involving stocks, bonds, agreement. You should consider each agree-
options, forward and futures contracts, and • Sales and exchanges ment based on its own facts and circumstan-
similar investments. See chapter 4 of Pub. • Abandonments ces. For more information, see chapter 3 in
550, Investment Income and Expenses. • Foreclosures and repossessions Pub. 535, Business Expenses.
• Sale of your main home. See Pub. 523, • Involuntary conversions
Selling Your Home. • Nontaxable exchanges Cancellation of a lease. Payments received
• Installment sales. See Pub. 537, Install- • Transfers to spouse by a tenant for the cancellation of a lease are
ment Sales. • Rollovers, exclusions, and deferrals of treated as an amount realized from the sale of
• Transfers of property at death. See Pub. certain capital gains property. Payments received by a landlord (les-
559, Survivors, Executors, and Administra- sor) for the cancellation of a lease are essen-
tially a substitute for rental payments and are
tors. taxed as ordinary income in the year in which
they are received.
Page 2 Chapter 1 Gain or Loss