U.S. · Tax forms
Form 4797 line 21, cost or other basis plus expense of sale.
What goes in before depreciation comes out, and the two credit reductions to remember.
Line 21 (“Cost or other basis plus expense of sale”) starts the adjusted-basis math in Part III. The instructions add one rule: reduce the cost or other basis by any enhanced oil recovery credit or disabled access credit, but do not adjust it for the items taken into account on line 22. Line 22 depreciation is then subtracted to get line 23.
Look up a line
Result
Line 21 in Part III
| Item | Meaning | What the IRS says |
|---|---|---|
| Line 20 | Gross sales price | The gross sales price includes money, the FMV of other property received, and any existing mortgage or other debt the buyer assumes or takes the property subject to. |
| Line 21 | Cost or other basis plus expense of sale | Reduce the cost or other basis of the property by the amount of any enhanced oil recovery credit or disabled access credit. |
| Do not adjust | Items already on line 22 | Do not adjust the cost or other basis for any of the items taken into account on line 22. |
| Line 22 | Depreciation allowed or allowable | Complete the two steps in the instructions. |
| Line 23 | Adjusted basis | Subtract line 22 from line 21. |
| Line 24 | Total gain | Subtract line 23 from line 20. |
What belongs on line 21
The form wording is cost or other basis plus expense of sale, so the starting point is your cost or other basis in the property plus the expense of sale. Line 22 then removes depreciation and similar deductions, so line 21 should not already be reduced by them. The IRS instruction says exactly that: do not adjust the cost or other basis for any of the items taken into account on line 22.
The credit reductions
Reduce line 21 for any enhanced oil recovery credit or disabled access credit. Those are the two credits the line 21 instructions name. Other basis reductions for credits (such as the qualified plug-in electric vehicle credit) appear instead in the line 22 step list.
Special rules
If you elected to treat as an expense the costs of certain real property under section 179, special rules apply for determining gain or loss and whether the basis is treated as section 1245 or section 1250 property; see Pub. 544. If the property was sold on the installment sale basis, see the instructions for Form 6252 before completing Part III.
Worked example
Made-up numbers. You bought equipment for $80,000 and paid $4,000 of expense of sale. No enhanced oil recovery or disabled access credit applies. Line 21 is $84,000. If line 22 is $52,000, line 23 is $32,000, and with a $100,000 gross sales price on line 20, line 24 is $68,000.
More line pages in this set
Related lines: Form 4797 Line 22, Form 4797 Line 26a.
Sources
- Instructions for Form 4797 (2025): the line-by-line instructions on this page. Page last reviewed or updated April 30, 2026. Read November 2, 2026.
- Form 4797 (Sales of Business Property): the printed line wording and arithmetic on the form. Read November 2, 2026.
Instructions for Form 4797, 2025 edition. The line labels were read from the Form 4797 (2025) PDF the IRS had posted on the date read. Line numbers can shift between years, so check them against the form for your tax year. Examples marked made-up use invented figures; the others reproduce the IRS’s own examples.
Frequently asked questions
What goes on Form 4797 line 21?
Cost or other basis plus expense of sale, reduced by any enhanced oil recovery credit or disabled access credit.
Should line 21 already include depreciation?
No. The instructions say not to adjust the cost or other basis for the items taken into account on line 22; depreciation is subtracted on line 22.
Which credits reduce line 21?
The instructions name the enhanced oil recovery credit and the disabled access credit.
What does line 21 lead to?
Line 23, adjusted basis, is line 21 minus line 22, and line 24, total gain, is line 20 minus line 23.
What about installment sales?
If the property was sold on the installment sale basis, see the instructions for Form 6252 before completing Part III.
Not tax advice
This page summarizes IRS instructions, mostly written for the people who prepare the form, and is not tax, legal or financial advice. A CPA or an enrolled agent can confirm what a line means for your return. Everything runs in your browser; nothing you enter is sent anywhere.