Michigan Adjustments of Gains and Losses From Sales of Business Property (MI-4797)

Michigan generally follows federal reporting for gains and losses from the sale, exchange, or disposition of business property. However, Michigan may require adjustments to determine the correct amount of gain or loss reportable on the Michigan return.

Form MI-4797, Adjustments of Gains and Losses From Sales of Business Property, is used to calculate Michigan-specific adjustments related to gains and losses reported on federal Form 4797.

Program Entry

• State
• Edit the Michigan return using the three dots 
• Income Subject to Tax
• Adjustments of Gains and Losses From Sales of Business Property (MI-4797)

What Is Form MI-4797?

Form MI-4797 is used to report Michigan adjustments related to:

• Sales of business property,
• Depreciable business assets,
• Real property used in a trade or business,
• Involuntary conversions,
• Certain gains and losses reported on federal Form 4797.

The form helps determine the Michigan portion of gains and losses when Michigan treatment differs from federal treatment.

Do You Want to Pull Federal Form 4797 Transactions to the MI-4797?

Yes

Select Yes if federal Form 4797 was completed as part of your federal return.

When selected, the program will automatically transfer eligible transactions from the federal Form 4797 to Michigan Form MI-4797. This is the most common selection and helps ensure that Michigan calculations begin with the same transactions reported federally.

After the federal information transfers, you can enter any Michigan-specific adjustments if required.

No

Select No if:

• You do not want to import transactions from the federal Form 4797; or
• You need to manually enter Michigan gain or loss information.

This option is generally used only in limited situations where Michigan reporting differs significantly from the federal return.

What Types of Property Are Reported on MI-4797?

Form MI-4797 may be used for transactions involving:

• Business equipment
• Machinery
• Buildings used in a trade or business
• Rental property
• Land used in a business
• Livestock used for business purposes
• Certain involuntary conversions
• Other qualifying business assets

How Does This Affect My Return?

Information reported on MI-4797 may:

• Increase or decrease Michigan taxable income.
• Adjust gains or losses from the sale of business property.
• Affect Michigan capital gain and loss calculations.
• Change the amount of Michigan tax owed or refunded.

Notes

• Most taxpayers who filed a federal Form 4797 will select Yes and allow the federal transactions to transfer automatically.
• Only enter Michigan-specific adjustments when Michigan treatment differs from federal treatment.
• Keep records supporting the sale, exchange, or disposition of business property.
• Retain copies of federal Form 4797 and any worksheets used to calculate Michigan adjustments.
• MI-4797 is separate from MI-1040D, which is used to report Michigan adjustments to capital gains and losses.