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Level 1

Form 4797 - Disposition of nondepreciable property

I am filling out a Disposition Worksheet to report the sale of a nondepreciable item used in my business. It was a small computer accessory that was expensed a few years ago. I sold it on eBay for $25 and recovered some of my original $100 cost. Now I need to recapture some of the expense I wrote off in the past.


In Part I, Line 2, there is a drop down box labeled, "Type of Property Code," with the following choices:


A = Section 1231

D = Section 1252

E = Section 1254

F = Section 1255

G = Capital Asset

H = Ordinary Income Asset


None of the "Section" property types seem to apply since this wasn't a depreciable asset. I chose "Ordinary Income Asset," but that wants to recapture $75 in ordinary income in Part II, Line 10, of Form 4797. I only need to recapture $25, not $75. It seems like TT is doing the calculation wrong.


Basic question is how to recapture something you previously expensed?

2 Replies
Level 13

Form 4797 - Disposition of nondepreciable property

It sounds like you are doing it right, but you need to enter ZERO for the Basis/Cost, and then $25 for the selling price.  That should show a $25 gain.

Level 15

Form 4797 - Disposition of nondepreciable property

Another way to do is, is if your business was active for even one day in 2019, and your business carried an inventory, just include the sales price in the total business income amount. It won't change inventory because since you expensed it in the past, it's "cost" would be zero and therefore would add nothing in the COGS section. Since this was a business asset, it would be more correct for the business to report the sale anyway.


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