Business equipment is purchased on March 10, 2016, used in the business until September 29, 2016, and sold at a $23,000 loss on October 10, 2016. The equipment was not suitable for the work the business had purchased it for. The loss on the disposition should have been reported in the 2016 Form 4797, Part:
A)I.
B)II.
C)III.
D)IV.
E)This transaction would not be reported in the Form 4797.

Question

Quizplus · Accepted Answer

The loss on the disposition of business equipment is reported on Form 4797, Part II, which is used to report gains and losses from the sale of business property. Part I is used for the sale of depreciable assets used in trade or business, Part III is used for involuntary conversions or condemnations, and Part IV is used for other dispositions of business property. Since the equipment was used in the business and sold at a loss, it falls under Part II.

Business Equipment Is Purchased on March 10, 2016, Used in the Business