Sale information on Form 4797 and Schedule D
Form 4797 and Schedule D are only used to report sales of unrelated business activities for the calculation of Form 990-T. Forms 990, 990-EZ, and 990-PF report sale information without using Form 4797, Schedule D (Form 1041), or Schedule D (Form 1120).
To classify a sale as unrelated business income subject to tax on Form 990-T, go to the screen where you entered the sale information. That could be the
SchD
screen, the Asset module, or the Sale
screen if asset detail is disabled.- On theSchDscreen, open theDetail schedulestatement and enter the activity code in the UBIT column for each item it applies to.
- In the asset module, for each asset, go to theDisposaltab, selectIncome Classification, then mark theUnrelated business activitycheckbox.
- On theSalescreen, mark theUnrelated business activitycheckbox.
Under section 512(b)(5), sales of property are exempt from unrelated business tax and aren't reported on Form 4797 or Schedule D unless 1 of the following conditions is true.
- The property was depreciated. If depreciated, the gain reported on Form 4797 or Schedule D is the lesser of the depreciation/deductions taken or the gain realized (Reg. 1.1245-6(b)). Losses aren't reported.
- The property was debt financed in the last 12-month period before the date of the disposition. The sale prints on Form 4797 or Schedule D based on amounts entered for each sale on theSchDscreen or in the asset module in the fields related to Debt financed property. The application prepares a worksheet supporting this calculation (Reg. 1.514(a)-1(a)(1)(v)).
