Line 14 of Form 1040 is used as a “catch-all” line item designed to ensure all true income is reported. Taxpayers realizing gains (or losses) from any of the following three areas must file a Form 4797 and, thus, will need to list the total gains (or losses) on Form 1040’s Line 14:
-Sales or Exchanges of Property Used in a Trade or Business1 (and Involuntary Conversions From Other
Than Casualty or Theft)
-Recapturing of depreciation and certain other items that must be reported as ordinary income on the disposition of property.
-Other various gains (or losses) from preferred stock ownership, certain deferred gains, investment in a small company, and more.
Determining which transaction must be reported on Form 4797 can be difficult. Please consult Form 4797 Instructions for a much more detailed explanation of how to calculate this line item.
1If the same asset was used for both business and personal purposes, you must allocate any gain between Form 4797 and Schedule D (See “Capital Gain (or Loss)”).
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