Partial Dispositions — Publication 544

You may elect to recognize a partial disposition of a MACRS asset and report the gain, loss, or other deduction on a timely filed return, including extensions, for the year of the disposition. In some cases, however, you are required to report the gain or loss on the partial disposition of a MACRS asset (see Required partial dispositions, later). MACRS assets include buildings (and their structural components) and other tangible depreciable property placed in service after 1986 that is used in a trade or business or for the production of income.

For more information on partial dispositions of MACRS property, see Regulations section 1.168(i)-8(d).

Partial disposition election. If you elect to recognize a partial disposition of a MACRS asset, report the gain or loss (if any) on Form 4797, Part I, II, or III, as applicable. See the Instructions for Form 4797.

Required partial dispositions. Report the gain or loss (if any) on the following partial dispositions of MACRS assets on Form 4797, Part I, II, or III, as applicable.

Sale of a portion of a MACRS asset.
Involuntary conversion of a portion of a MACRS asset, other than from a casualty or theft.
Like-kind exchange of a portion of a MACRS asset (Form 4797, line 5 or 16).