Sales, Exchanges, and Other Dispositions: The Basic Tax Rules
Published November 7, 2026
Publication 544 (2025), Sales and Other Dispositions of Assets, explains how to report gains and losses when property leaves your hands. It covers sales, exchanges, and other dispositions. This guide summarizes the basic rules. It is general information. It is not advice about your case.
What counts as a disposition
It covers sales and exchanges. It also covers other dispositions, such as abandonments, foreclosures, repossessions, and involuntary conversions. Each one has its own rules. The first step is to decide which kind of event happened, because the reporting depends on it.
Gain or loss
A gain is the amount you realize from a sale or exchange that is more than the property's adjusted basis. A loss is the reverse. If your adjusted basis is more than the amount you realize, you have a loss. The amount you realize is what you receive for the property. It also explains that the amount you realize can include debt that the buyer takes over.
Your adjusted basis starts with your cost or other basis. It changes over time. Improvements usually raise it. Depreciation and certain other amounts usually lower it. For more on starting basis, see Basis of Property: Basic Rules for Gain and Loss.
Abandonments
It says you abandon property when you voluntarily and permanently give up possession and use of it. You intend to end your ownership, and you do not pass it to anyone else. An abandonment is generally not treated as a sale or exchange. If the amount you realize is more than your adjusted basis, you have a gain. If your adjusted basis is more than the amount you realize, you have a loss.
A loss from abandoned business or investment property is generally an ordinary loss. It also explains a partial disposition election for certain MACRS assets. You must make that election on your timely filed return for the year of the abandonment.
Foreclosures, repossessions, and involuntary conversions
A lender may send Form 1099-A if your property secures a loan and the lender knows it was abandoned. If the debt is canceled, the lender may use Form 1099-C instead. It covers foreclosures and repossessions in separate sections because the rules depend on the debt and the event. Involuntary conversions include property destroyed, stolen, or taken by condemnation. For losses of that kind, see Casualty and Theft Losses: When Form 4684 Applies.
Exchanges
An exchange can be a taxable event. Some exchanges of like-kind real property can be tax-deferred under special rules. It explains the exchange rules and the time limits for identifying and receiving replacement property. Those rules are complex. Work through them with a tax professional before you start. For the form, see Form 8824: Like-Kind Exchanges of Real Property.
Where the gain or loss goes
Most gains and losses on capital assets are reported on Form 8949 and then on Schedule D. Gains and losses on business property used in a trade or business often go on Form 4797. Check the form instructions for the exact lines, because the rules depend on how long you held the property and how you used it. For Form 8949, see Form 8949: Check Boxes and Columns Explained. For business property, see Form 4797: Reporting Sales of Business Property.
Records to keep
Keep the records that show your basis and the date you acquired the property. Also keep records of improvements, depreciation, and the date and terms of each disposition. Keep the statements you receive, such as Form 1099-B, Form 1099-S, and Form 1099-A or 1099-C. Compare those forms with your own records before you file. Keep these records for as long as they may be needed to support the return.
Next steps
List each property that left your hands during the year. For each one, note the kind of disposition, the amount you realized, your adjusted basis, and the holding period. Then match each item to the right form. If an item is large or unusual, such as a business asset or a foreclosure, ask a tax professional to review it before you file.
Sources: Sources: IRS, Publication 544 (2025), Sales and Other Dispositions of Assets (https://www.irs.gov/pub/irs-pdf/p544.pdf) This is general information, not advice about your specific return.
