Drake Tax - 4797 - Sale of Farm Animal

Article #: 17530

Last Updated: February 24, 2026

Tags: Drake Tax

Drake Tax logo

Generally, assets held for more than a year carry to Part I and items held for 1 year or less carry to Part II of Form 4797; however, there is a special rule for cattle and horses used in a trade or business. The sale of this type of asset, is reported on Part I, Part II, or Part III depending on whether it was held for more or less than 24 months, and whether it was sold at a gain or loss. The chart from the Form 4797 Instructions details the following:

Cattle and horses used in a trade or business for draft, breeding, dairy, or sporting purposes:	Held less than 24 Months	Held 24 months or more
a Sold at a gain	Part II	Part III (1245)
b Sold at a loss	Part II	Part I
c Raised cattle and horses sold at a gain	Part II	Part I

In Drake Tax, if you select FA in the Property Type drop-down list on the 4562 screen, the farm animal will be treated as a two-year, long-term Section 1245 property.

If it is a raised animal, report the sale on the 4797 screen directly (instead of the 4562 screen). There is no selection to indicate that it is a raised animal in Drake Tax. On the 4797 screen, make the necessary entries, then use the Force this item to part number to have the amount flow to the correct part.