Drake Tax - Sale of Asset Used for Personal and Business Use
Article #: 14125
Last Updated: October 18, 2024
A loss on capital asset items held for personal use is not deductible on Form 1040. Generally, gain from the sale or exchange of a capital asset held for personal use is a capital gain.
According to the Schedule D instructions:
"Loss from the sale or exchange of a capital asset held for personal use isn't deductible. But if you had a loss from the sale or exchange of real estate held for personal use for which you received a Form 1099-S, you must report the transaction on Form 8949 even though the loss isn't deductible."
Beginning with Drake 16, the software reports the sale of the business use portion on Form 4797, Sales of Business Property, and the personal use portion on Schedule D, Capital Gains and Losses, when using the "If Sold" section of the 4562 screen and less than 100% Business % Use is entered.*
In prior years, the business use portion would be reported on Form 4797, but an entry was required on screen 8949 to capture the personal use portion of the sale and report it to the Schedule D.
See the Schedule D instructions for more information.
Note The Business % use box is designed to indicate what percent of an asset was used for business purposes, not what portion of an asset is owned by the taxpayer. An entry on the 4562 screen should reflect only the amount that the taxpayer owns. Then, the Business % use box should be utilized to indicate what portion of that asset was used for the taxpayer's business. See the field help (F1) for more information and instances where a Business % use should not be entered.