Ask a CPA

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.

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.

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.

A sale is a transfer of property for money or a mortgage, note, or other promise to pay money.
An exchange is a transfer of property for other property or services.

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.

The long term holding period is more than one year. The short term holding period is one year or less.
The significance of this determination is that gains on long term assets benefit from lower tax rates.

In the sale of assets, all the tangible and intangible assets to be transferred to the buyer are normally separately identified. The buyer's assumption of liabilities, if any, must be carefully provided for.
The sale of assets is in contrast to the sale of stock, in which all assets and liabilities of the entity represented by the stock are transferred as part of the sale of stock. The entity remains in place, and so do the assets and liabilities. Only the ownership of the stock itself is changed in such a sale.

Business assets are things of value that are used in a business. The assets are of two types:
Tangible assets, Cash and Receivables, Inventory like business vehicles, equipment, supplies, and buildings.
Intangible assets, like goodwill copyrights, patents, and trademarks.

Depreciable assets such as buildings, land, machinery and equipment held more than one year are classified as (IRC) Section 1231 property.
The sale triggers a taxable event (gain or loss) that is reported on IRS Form 4797, Sale of Business Property, Part 1.