Introduction

This chapter explains how to figure, and report on your tax return, your gain or loss on the disposition of your property or debt and whether such gain or loss is ordinary or capital. Ordinary gain is taxed at the same rates as wages and interest income, while net capital gain is generally taxed at a lower rate. This chapter discusses dispositions such as sales and exchanges (including like-kind exchanges and sales of capital and noncapital assets); hedging transactions; sale of livestock; cutting timber; sale of a farm; and cancellation of debt from foreclosures, repossessions, and abandonments.

Topics This chapter discusses:

• Sales and exchanges

• Ordinary or capital gain or loss

See How To Get Tax Help for information about getting publications and forms.