A disposition of property includes the following transactions.

• You sell business property for cash or other property.
• You exchange property for other property.
• You receive money as a tenant for the cancellation of a lease.
• You receive money for granting the exclusive use of a copyright throughout its life in a particular medium.
• You transfer property to satisfy a debt.
• You abandon property.
• Your bank or other financial institution forecloses on your mortgage or repossesses your property.
• Your property is damaged, destroyed, or stolen, and you receive property or money in payment.
• Your property is condemned, or disposed of under the threat of condemnation, and you receive property or money in payment.

For details about damaged, destroyed, or stolen property, see Publication 547, Casualties, Disasters, and Thefts (Business and Nonbusiness). For details about the other dispositions, see chapter 1 in Publication 544.

Nontaxable exchanges. Certain exchanges of property are not taxable. This means any gain from the exchange is not recognized and you cannot deduct any loss. Your gain or loss will not be recognized until you sell or otherwise dispose of the property you receive.

Like-kind exchanges. A like-kind exchange is the exchange of property for the same kind of property. It is the most common type of nontaxable exchange. To be a like-kind exchange, the property traded and the property received must be both of the following.

• Business or investment property.
• Like property.

Report the exchange of like-kind property on Form 8824, Like-Kind Exchanges. For more information about like-kind exchanges, see chapter 1 in Publication 544.

Installment sales. An installment sale is a sale of property where you receive at least one payment after the tax year of the sale. If you finance the buyer's purchase of your property, instead of having the buyer get a loan or mortgage from a third party, you probably have an installment sale.

For more information about installment sales, see Publication 537, Installment Sales.

Sale of a business. The sale of a business is not usually a sale of one asset. Instead, all the assets of the business are sold. Generally, when this occurs, each asset is treated as being sold separately for determining the treatment of gain or loss.

Both the buyer and seller involved in the sale of a business must report to the IRS the allocation of the sales price among the business assets. Use Form 8594, Asset Acquisition Statement Under Section 1060, to provide this information. The buyer and seller should each attach Form 8594 to their federal income tax return for the year in which the sale occurred.

For more information about the sale of a business, see chapter 2 of Publication 544.

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