If you disposed of both depreciable property and other property (for example, a building and land) in the same transaction and realized a gain, you must allocate the amount realized between the two types of property based on their respective Fair Market Values (FMVs) to figure the part of the gain to be recaptured as ordinary income because of depreciation. The disposition of each type of property is reported separately in the appropriate part of Form 4797 Sales of Business Property (for example, for property held more than one year, report the sale of a building in Part III and land in Part I).

For more information, refer to the IRS Instructions for Form 4797.

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