Small Business

If you sell a group of assets that make up a trade or business and the buyer's basis in those assets are determined wholly by the amount paid for the assets, both the seller and buyer must allocate the total sales price to the assets transferred.
Form 8594 Asset Acquisition Statement should also be filed with the IRS.

You must know the basis of your property to determine whether you have a gain or loss from its sale or other disposition.
The basis of property you buy is usually its cost minus any depreciation taken.
However, if you acquired the property by gift, inheritance, or in some way other than buying it, you must use a basis other than its cost.

You may elect to report the sale on IRS Form 6252 which spreads the tax liability on the gain over the life of the installment period.
You may elect not to use the installment method if you want to report the entire profit in the current year of sale.

Selling expenses should be added to the cost amount and subtracted from the gross proceeds sales amount on IRS Schedule D or Form 4797.
This will help insure that the gross proceeds figure agrees with the 1099 slip that the IRS will receive.

Generally, if you exchange business or investment property solely for business or investment property of a like-kind, no gain or loss is recognized under Internal Revenue Code Section 1031.
If, as part of the exchange, you also receive other (not like-kind) property or money, gain is recognized to the extent of the other property and money received, but a loss is not recognized.
Section 1031 does not apply to exchanges of inventory, stocks, bonds, notes, other securities or evidence of indebtedness, or certain other assets.

Generally, depreciable Real Property sold at a gain is considered either Section 1231 if depreciated post 1987or Section 1250 property if depreciated pre 1987 and reported on Form 4797
Bonus depreciation taken in years 2008 through the present year must be picked up as ordinary income
Gain attributable to depreciation pre 1987 is subject to recapture as ordinary income unless straight line method was used..
Gain on the disposition of Section 1250 property is treated as ordinary income to the extent of additional depreciation allowed or allowable on the property.
Depreciable Residential Rental Property sold at a loss is considered Section 1250 property reported on Form 4797 Part 1 if long term, and 4797 part 2 if short term.

Exchanges of partnership interests do not qualify as nontaxable exchanges of like-kind property. This applies regardless of whether they are general or limited partnership interests.

When expensed property is sold or exchanged, gain is ordinary income up to the extent of the first year expense deduction plus MACRS deductions and bonus depreciation taken.
Expensing deductions are also subject to recapture if property placed in service after 1986 is not used more than 50% of the time for business use in any year before the end of the recovery period.

A gain on the disposition of section 1245 property is treated as ordinary income to the extent of depreciation allowed or allowable on the property.
Any gain recognized that is more than the part that is ordinary income from depreciation is a section 1231 gain.
Generally, section 1245 property includes any property that is or has been subject to an allowance for depreciation or amortization.