Sold / scrapped disposal method

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This topic describes the fields that appear in the Disposal tab or the Enter Disposal Information dialog after you select Sold / Scrapped as the method of disposal and you enter the date on which the asset was disposed.

Special information

Enter disposal information (for one asset)

Enter a mass disposition (for multiple assets in a single disposition)

Note: The application does not automatically handle exchanges involving non-qualifying property; it assumes all losses are unrecognized.

Fields & buttons

Enter the gross proceeds from the sale.

Note: This field is available only for the Sold / Scrapped method of disposal.

If the asset is listed property or a luxury auto and you entered Sold / Scrapped, enter the asset's overall (or lifetime) business use percentage. The application uses this overall percentage to calculate the basis for the gain/loss calculation only. The percentage does not affect any year's depreciation expense.

Note: This field is available only for the Sold / Scrapped method of disposal if the asset is listed property, a luxury auto, or a home office asset.

The field shows the amount of depreciation actually taken on the disposed asset. When disposing of a single asset, you can override the amount in this field if the allowable depreciation is greater or you disagree with the total.

Note: This field is available only for the Sold / Scrapped method of disposal.

The application automatically enters depreciation allowed on other property for 1245 assets that were received in trade from a prior Like-kind exchange and the option is marked under Setup > Options. If you disagree with the total, you can override the amount in this field.

The application automatically calculates and displays the gain or loss for this asset. The application does not allow you to override the gain or loss on this tab.

To view an explanation of the gain/loss calculation, click the underlined field label to open the Tax Gain/(Loss) dialog.

Note: This field is available only for the Sold / Scrapped method of disposal.

This field shows the amount of depreciation actually taken on the disposed asset. When disposing of a single asset, you can override the amount in this field if you disagree with the total.

Note: This field is available only for the Sold / Scrapped method of disposal.

The application automatically enters depreciation allowed on other property for 1245 assets that were received in trade from a prior Like-kind exchange and the option is marked under Setup > Options. If you disagree with the total, you can override the amount in this field.

The application automatically calculates and displays the gain or loss for this asset. The application does not allow you to override the gain or loss on this tab.

To view an explanation of the gain/loss calculation, click the underlined field label to open the Book Gain/(Loss) dialog.

Note: This field is available only for the Sold / Scrapped method of disposal.

From the drop-down list, select the type of property being disposed of to determine which part of Form 4797 applies. The application default is section 1245 property used in a trade or business or section 1250 real property. If you are uncertain about which part of Form 4797 applies, consult the IRS instructions for the form.

When you enter Form 4797 information for raised cattle, horses, or other livestock sold at a gain, you must use the force options that are available from the drop-down list.

If you don't want the asset reported on Form 4797, select Not reported on Form 4797 from the Type of property field.

Note: These fields are only available for the Sold / Scrapped method of disposal.

If the asset was not used in trade or business, select Not used in trade or business from the Type of property field.

Note: This field is available only for the Sold / Scrapped method of disposal.

Mark this checkbox if proceeds were reported on Form 1099.

Note: This field is available only for the Sold / Scrapped method of disposal.

Mark this checkbox if the asset was sold to a related party and the loss is disallowed.

Note: This field is available only for the Sold / Scrapped method of disposal.

Mark this checkbox to apply the business use percentage to gross proceeds and expenses.

Note: This field is available only for the Sold / Scrapped method of disposal.

When disposing of an asset that results in a Form 4797 Part III gain, click this button to access a dialog in which you can supply the necessary information so UltraTax CS can prepare Form 4797, Part III.

Note: This button is available only for the Sold / Scrapped method of disposal.

Click this button to open a dialog in which you can enter installment sale information to complete Form 6252.

For 990 clients only: If the entity type of the open client is Exempt, the Income Classification button appears here, rather than the Installment Sale button.

Note: This button is available only for the Sold / Scrapped method of disposal.

Click this button to open a dialog in which you can enter state information regarding this asset for the following states.

  • 1040 clients: Idaho, Iowa, Massachusetts, New Hampshire, Pennsylvania, Vermont, and Wisconsin.
  • 1120 clients: Pennsylvania and Wisconsin
  • 1065 clients: Pennsylvania and Wisconsin

Note: This button is available only for the Sold / Scrapped method of disposal.


The following fields appear only for 1120 S Corporation clients.

If the asset is subject to the S Corporation built-in gains tax, enter the fair market value at the S corporation election date. The application calculates the amount of recognized built-in gain or loss on that asset.

  • The built-in gains tax allocated to ordinary income items transfers to the Taxes and Licenses line on Form 1120S, Page 1.
  • The built-in gains tax allocated to section 1231 items reduces the section 1231 gain reported on Schedule K for Form 1120S.
  • The built-in gains tax allocated to unrecaptured section 1250 items reduces the section 1231 gain and the unrecaptured section 1250 gain reported on Schedule K for Form 1120S.

Note: This field only appears for 1120 S Corporation clients when Sold / Scrapped is selected in the Method field.

If the asset is subject to the S Corporation built-in gains tax, enter the adjusted basis at the S corporation election date. The application calculates the amount of recognized built-in gain or loss on that asset.

  • The built-in gains tax allocated to ordinary income items transfers to the Taxes and Licenses line on Form 1120S, Page 1.
  • The built-in gains tax allocated to section 1231 items reduces the section 1231 gain reported on Schedule K for Form 1120S.
  • The built-in gains tax allocated to unrecaptured section 1250 items reduces the section 1231 gain and the unrecaptured section 1250 gain reported on Schedule K for Form 1120S.

Note: This field only appears for 1120 S Corporation clients when Sold / Scrapped is selected in the Method field.

Enter the amount paid in advance against the built-in gain.

Note: This field only appears if the Puerto Rico treatment is added to the client and the tax year end is 2014 or later.

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