If an involuntary conversion was the result of a theft or casualty, you have to prepare Form 4684. To report net gains, Form 4684 will direct you to Form 1040, Schedule D, or Form 4797, depending on the type of property involved. Generally, use of Form 4797 reflects the netting requirements for involuntary conversions of business, rental, or royalty property under Section 1231 (44.8).
If the conversion occurred because of a condemnation, you use Form 4797 for business or investment property and Schedule D for personal-use property.
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