Updated October 18, 2026. Quick answer: Lines 19 to 24 open Part III, where Form 4797 works out the gain on a property that may carry depreciation recapture. Line 19 describes each property, line 20 is the gross sales price, line 21 is cost or other basis plus expense of sale, line 22 is depreciation allowed or allowable, line 23 is the adjusted basis and line 24 is the total gain. The figures come from your sale records and your depreciation history.
What Part III is for
The part is headed “Gain From Disposition of Property Under Sections 1245, 1250, 1252, 1254, and 1255”. The instructions explain the purpose: “Use Part III to figure recapture of depreciation and other items that must be reported as ordinary income on the disposition of certain property.” They say how far this first block goes: “Complete lines 19 through 24 to determine the gain on the disposition of the property.” Property held a short time usually does not belong here: “Generally, for property held 1 year or less, do not complete Part III; instead, use Part II.” That route is covered on the lines 13 to 18 page.
Line 19: describing the properties
The line reads “Description of section 1245, 1250, 1252, 1254, or 1255 property:” with columns for the date acquired and the date sold, and four property columns lettered A to D. The form says “These columns relate to the properties on lines 19A through 19D.” For more than four properties, the instructions say “If you have more than four properties to report, use additional forms.” The instructions have no separate paragraph for line 19; the caption is the guide.
Line 20: gross sales price
The caption is “Gross sales price (Note: See line 1a before completing.)”. The instructions begin “The gross sales price includes money, the FMV of other property received,” and then continue with further items in the same sentence; read the full paragraph in the instructions before entering the figure. For a casualty or theft gain, they add “include insurance or other reimbursement you received or expect to receive for each item.” Line 1a, which the caption points to, is explained on the 1099-B proceeds and cost basis page.
Lines 21 to 23: basis, depreciation and adjusted basis
Line 21 is captioned “Cost or other basis plus expense of sale”. The instructions say “Reduce the cost or other basis of the property by the amount of any enhanced oil recovery credit or disabled access credit.” They add “However, do not adjust the cost or other basis for any of the items taken into account on line 22.”
Line 22 is captioned “Depreciation (or depletion) allowed or allowable”. The instructions give two steps: “Step 1. Add amounts such as the following.” The list starts with “Deductions allowed or allowable for depreciation (including any special depreciation allowance (see the Instructions for Form 4562)), amortization, depletion, or preproductive expenses” and includes “The section 179 expense deduction.” Then “Step 2. From the Step 1 total, subtract amounts such as the following.” One item there is “Any section 179 or 280F(b)(2) recapture amount included in gross income in a prior tax year because the business use of the property decreased to 50% or less.” Depreciation records and the 4562 forms from past years are the usual source; the Form 4562 page explains that form.
Line 23 is captioned “Adjusted basis. Subtract line 22 from line 21.”. The instructions add one rule for a specific property type: “For section 1255 property, enter the adjusted basis of the section 126 property disposed of.”
Line 24: total gain
The caption is “Total gain. Subtract line 23 from line 20”. Line 24 is the starting point that the property-type lines 25 to 29 work from; they are on the lines 25 to 32 page.
A short illustration of the arithmetic on the form (computed illustration, not an IRS example): with $100,000 on line 21 and $40,000 on line 22, line 23 is computed as $100,000 minus $40,000, which is $60,000. With $90,000 on line 20, line 24 is then computed as $90,000 minus $60,000, which is $30,000.
Where the number comes from
Line 20 comes from the sale itself, and line 1a is the cross-reference when a Form 1099-B or 1099-S was issued. Lines 21 and 22 come from your asset and depreciation records. Lines 23 and 24 are arithmetic on those lines. A home that was turned into a rental follows its own path; see the converting your home to a rental page.
Where it goes next
The form’s own summary caption says “Complete property columns A through D through line 29b before going to line 30.” Line 30 is “Total gains for all properties. Add property columns A through D, line 24”. That summary is on the lines 25 to 32 page.
Edition and line numbers
This page reads the 2025 Form 4797, Sales of Business Property, and its 2025 instructions, the current files irs.gov served on 2026-10-18. They are the files for the tax year 2025 return, filed in 2026. The form header says “Attach to your tax return.” Check the tax year printed on the form you are filling in and use the line numbers on that year’s form, because a different year’s form can number or word its lines differently. The whole form is walked through on the Form 4797 line by line guide page.
Common mistakes
- Putting a fifth property in the same Part III. The instructions say “If you have more than four properties to report, use additional forms.”
- Adjusting line 21 for items already in line 22. The instructions say “However, do not adjust the cost or other basis for any of the items taken into account on line 22.”
- Using Part III for property held a short time. The instructions say “Generally, for property held 1 year or less, do not complete Part III; instead, use Part II.”
Related: Form 4562, 1099-B proceeds and cost basis, converting your home to a rental, and Form 8949.
Sources
- Instructions for Form 4797, Sales of Business Property (2025): https://www.irs.gov/pub/irs-pdf/i4797.pdf
- Form 4797, Sales of Business Property (2025): https://www.irs.gov/pub/irs-pdf/f4797.pdf
Read from the IRS documents linked above on October 18, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer, the account provider or the IRS is the right place to confirm anything consequential.