How To Report Gains and Losses
How you report gains and losses depends on whether the property was business, income-producing, or personal-use property.
Personal-use property.
If you have a loss, use both of the following.
- Form 4684.
- Schedule A (Form 1040), Itemized Deductions.
If you have a gain, report it on both of the following.
- Form 4684.
- Schedule D (Form 1040), Capital Gains and Losses.
Business and income-producing property.
Use Form 4684 to report your gains and losses. You will also have to report the gains and losses on other forms as explained next.
Property held 1 year or less.
Individuals report losses from income-producing property and property used in performing services as an employee on Schedule A (Form 1040). Gains
from business and income-producing property are combined with losses from business property (other than property used in performing services as an
employee) and the net gain or loss is reported on Form 4797. If you are not otherwise required to file Form 4797, only enter the net gain or loss on
your tax return on the line identified as from Form 4797. Next to that line, write Form 4684. Partnerships and S corporations should see the
Form 4684 instructions to find out where to report these gains and losses.
Property held more than 1 year.
If your losses from business and income-producing property are more than gains from these types of property, combine your losses from
business property (other than property used in performing services as an employee) with total gains from business and income-producing property.
Report the net gain or loss as an ordinary gain or loss on Form 4797. If you are not otherwise required to file Form 4797, only enter the net gain or
loss on your tax return on the line identified as from Form 4797. Next to that line, write Form 4684. Individuals deduct any loss of
income-producing property and property used in performing services as an employee on Schedule A (Form 1040). Partnerships and S corporations should
see Form 4684 to find out where to report these gains and losses.
If losses from business and income-producing property are less than or equal to gains from these types of property, report the net
amount on Form 4797. You may also have to report the gain on Schedule D depending on whether you have other transactions. Partnerships and S
corporations should see Form 4684 to find out where to report these gains and losses.
Depreciable property.
If the damaged or stolen property was depreciable property held more than 1 year, you may have to treat all or part of the gain as ordinary income
to the extent of depreciation allowed or allowable. You figure the ordinary income part of the gain in Part III of Form 4797. See Depreciation
Recapture in chapter 3 of Publication 544 for more information about the recapture rule.
Adjustments to Basis
If you have a casualty or theft loss, you must decrease your basis in the property by any insurance or other reimbursement you receive and by any
deductible loss. The result is your adjusted basis in the property.
You must increase your basis in the property by the amount you spend on repairs that substantially prolong the life of the property, increase its
value, or adapt it to a different use. To make this determination, compare the repaired property to the property before the casualty. See
Adjusted Basis in Publication 551 for more information on adjustments to basis.
If Deductions Are More Than Income
If your casualty or theft loss deduction causes your deductions for the year to be more than your income for the year, you may have a net
operating loss (NOL). You can use an NOL to lower your tax in an earlier year, allowing you to get a refund for tax you already paid. Or, you
can use it to lower your tax in a later year. You do not have to be in business to have an NOL from a casualty or theft loss. For more information,
see Publication 536, Net Operating Losses (NOLs) for Individuals, Estates, and Trusts.
How To Get Tax Help
You can get help with unresolved tax issues, order free publications and forms, ask tax questions, and get more information from the IRS in several
ways. By selecting the method that is best for you, you will have quick and easy access to tax help.
Contacting your Taxpayer Advocate.
If you have attempted to deal with an IRS problem unsuccessfully, you should contact your Taxpayer Advocate.
The Taxpayer Advocate represents your interests and concerns within the IRS by protecting your rights and resolving problems that have not been
fixed through normal channels. While Taxpayer Advocates cannot change the tax law or make a technical tax decision, they can clear up problems that
resulted from previous contacts and ensure that your case is given a complete and impartial review.
To contact your Taxpayer Advocate:
- Call the Taxpayer Advocate at
1-877-777-4778.
- Call, write, or fax the Taxpayer Advocate office in your area.
- Call 1-800-829-4059 if you are a
TTY/TDD user.
For more information, see Publication 1546, The Taxpayer Advocate Service of the IRS.
Free tax services.
To find out what services are available, get Publication 910, Guide to Free Tax Services. It contains a list of free tax publications
and an index of tax topics. It also describes other free tax information services, including tax education and assistance programs and a list of
TeleTax topics.
Personal computer. With your personal computer and modem, you can access the IRS on the Internet at www.irs.gov. While
visiting our web site, you can:
- See answers to frequently asked tax questions or request help by e-mail.
- Download forms and publications or search for forms and publications by topic or keyword.
- Order IRS products on-line.
- View forms that may be filled in electronically, print the completed form, and then save the form for recordkeeping.
- View Internal Revenue Bulletins published in the last few years.
- Search regulations and the Internal Revenue Code.
- Receive our electronic newsletters on hot tax issues and news.
- Learn about the benefits of filing electronically (IRS e-file).
- Get information on starting and operating a small business.
You can also reach us with your computer using File Transfer Protocol at ftp.irs.gov.
TaxFax Service. Using the phone attached to your fax machine, you can receive forms and instructions by calling
703-368-9694. Follow the directions from the prompts. When you order forms, enter the catalog number for the form you need. The
items you request will be faxed to you.
For help with transmission problems, call the FedWorld Help Desk at 703-487-4608.
Phone. Many services are available by phone.
- Ordering forms, instructions, and publications. Call 1-800-829-3676 to order current and prior year
forms, instructions, and publications.
- Asking tax questions. Call the IRS with your tax questions at 1-800-829-1040.
- Solving problems. Take advantage of Everyday Tax Solutions service by calling your local IRS office to set up an in-person
appointment at your convenience. Check your local directory assistance or www.irs.gov for the numbers.
- TTY/TDD equipment. If you have access to TTY/TDD equipment, call 1-800-829- 4059 to ask tax
questions or to order forms and publications.
- TeleTax topics. Call 1-800-829-4477 to listen to pre-recorded messages covering various tax
topics.
Evaluating the quality of our telephone services. To ensure that IRS representatives give accurate, courteous, and professional answers,
we use several methods to evaluate the quality of our telephone services. One method is for a second IRS representative to sometimes listen in on or
record telephone calls. Another is to ask some callers to complete a short survey at the end of the call.
Walk-in. Many products and services are available on a walk-in basis.
- Products. You can walk in to many post offices, libraries, and IRS offices to pick up certain forms, instructions, and
publications. Some IRS offices, libraries, grocery stores, copy centers, city and county governments, credit unions, and office supply stores have an
extensive collection of products available to print from a CD-ROM or photocopy from reproducible proofs. Also, some IRS offices and libraries have the
Internal Revenue Code, regulations, Internal Revenue Bulletins, and Cumulative Bulletins available for research purposes.
- Services. You can walk in to your local IRS office to ask tax questions or get help with a tax problem. Now you can set up an
appointment by calling your local IRS office number and, at the prompt, leaving a message requesting Everyday Tax Solutions help. A representative
will call you back within 2 business days to schedule an in-person appointment at your convenience.
Mail. You can send your order for forms, instructions, and publications to the Distribution Center nearest to you and receive a response
within 10 workdays after your request is received. Find the address that applies to your part of the country.
- Western part of U.S.:
Western Area Distribution Center
Rancho Cordova, CA 95743-0001
- Central part of U.S.:
Central Area Distribution Center
P.O. Box 8903
Bloomington, IL 61702-8903
- Eastern part of U.S. and foreign addresses:
Eastern Area Distribution Center
P.O. Box 85074
Richmond, VA 23261-5074
CD-ROM for tax products. You can order IRS Publication 1796, Federal Tax Products on CD-ROM, and obtain:
- Current tax forms, instructions, and publications.
- Prior-year tax forms and instructions.
- Popular tax forms that may be filled in electronically, printed out for submission, and saved for recordkeeping.
- Internal Revenue Bulletins.
The CD-ROM can be purchased from National Technical Information Service (NTIS) by calling 1-877-233-6767 or on the
Internet at http://www.irs.gov/cdorders. The first release is available in early January and the final release is available in late
February.
CD-ROM for small businesses. IRS Publication 3207, Small Business Resource Guide, is a must for every small business owner or
any taxpayer about to start a business. This handy, interactive CD contains all the business tax forms, instructions and publications needed to
successfully manage a business. In addition, the CD provides an abundance of other helpful information, such as how to prepare a business plan,
finding financing for your business, and much more. The design of the CD makes finding information easy and quick and incorporates file formats and
browsers that can be run on virtually any desktop or laptop computer.
It is available in March. You can get a free copy by calling 1-800-829-3676 or by visiting the website at
www.irs.gov/smallbiz.
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