For many, navigating the sea of tax forms proves a difficult task. If you own a business or corporation, you may have two more forms to wrestle with than the average taxpayer. Both the Form 4797 and Schedule D pertain to funds acquired through the sale or liquidation of a business. While each of these forms are slightly different, both are ways in which you can report to the government the money you earned through your lucrative business dealings during the tax year in question.
Form 4797's Purpose
Form 4797 is intended for use as a means of reporting a business property sale. Any individual who sold a business property or traded the business property during that tax year must complete this form. The definition of property for the purposes of this form isn't limited to inhabitable land but also can include oil or mineral properties.
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Schedule D's Uses
Business owners and operators must file Schedule D to report mergers or acquisitions. Not all mergers or acquisitions require the completion of this form. Business owners only need to file this form for statutory mergers or for mergers that impact the alignment of W-2 forms and 941 forms.
Statutory Merger vs. Consolidation
A statutory merger, or merger for which a business owner would need to complete a Schedule D form, differs from a standard consolidation. In a traditional consolidation, one company buys up and overtakes a second. In a statutory merger, however, the companies join together with neither taking control of the other. When companies complete a statutory merger, the power over the new resulting company is divided between all of the stakeholders who oversaw the previous companies. For example, if two companies, each headed by two individuals, go through a statutory merger, the control of the resulting company will be divided between the four heads of the previous companies.
Schedule D and Form 4797 are not mutually exclusive of each other. Depending upon the business actions undertaken during the tax year, a business owner may have to file both of these tax forms. While some information would appear on both forms, each form must be filed separately if business transactions necessitating each form were completed during that tax year.