 self-employment tax, which is kind of equivalent to payroll tax, social security and Medicare, but in the state, you might also owe state taxes, which they might use a state income tax, but they also might use a sales tax or have some other business tax that they that they hitch you with. So consider consulting with a tax professional to ensure you're taking advantage of all eligible deductions and credits and complying with all tax laws and reporting requirements. Let's look at the line instructions. Line four, other gains or losses. So if you sold or exchanged assets used in a trade or business, see the instructions for form 4797. Who needs to file form 4797? Taxpayers who sold or exchanged business property, including real estate, used in a business. Taxpayers who received business property from a casualty or theft. Taxpayers who disposed of depreciable property used in their business and taxpayers who sold certain types of business property that cannot be depreciated. So note, when you talk about business property, we have an income statement on the Schedule C. We don't typically have the balance sheet reported as its liabilities equity. We just have the Schedule C, which is the income statement because we have an income tax, but so you would think that you would just expense things as they happen, which would normally people would think of a cashed based system, which might be usable, although there could be exceptions. If you have a substantial amount of inventory, for example, and whatnot, which we'll talk more about those later. But even if you're on a cashed based system, sometimes you have to do a cruel things. Meaning, for example, if you buy property, plant and equipment, you have to put it on the books as an asset instead of expensing it. Because there's such a big difference in timing difference between the point in time that you actually use that stuff versus the time that you purchase it. And so so so now you have to deal with depreciation if you have depreciable assets. And then when you sell those assets, then you might sell them at a gain or a loss. And then you have to deal with the calculation of the sale or disposal of depreciable assets. Not all small businesses might not have to deal with many depreciable assets depends on the type of industry you're in. If you just have gig work, for example, you might not have a whole lot of depreciable assets, because you might not have, you know, you might have very limited things that you're using for the business that are long term assets. In any case, we'll talk more about that later in the Schedule C section just to point it out here. IRS Form 4797 quote, sale of business property end quote is used to report the sale exchange or involuntary conversion of property used in your trader business and certain depreciable property. This form helps taxpayers calculate the gain or loss from these transactions and determine how the gain or loss is treated for tax purposes, e.g. as ordinary income or capital gain. So in other words, one of the things is when you sell property, it's kind of like when you sell stock, it's usually going to be a categorized as capital gains. And we talked about the idea that sometimes you could have beneficial treatments in terms of tax rates that are more beneficial than the normal ordinary income progressive tax rates and capital gains sometimes falls into that category in part because like if you sell something that went up in value like a building, then the building, even though you sold it like this year, it might have increased in value over the last 10 years, right? And so if you sell it this year and you got a gain of $100,000, that $100,000 might put you into a much higher tax bracket because you're recognizing all the gain this year. Whereas if you were able to recognize the gain over the last 10 years, because we have a progressive tax system, it might not have put us up into as high a tax bracket. That's just one kind of argument as to why we might have capital gains taxed at different rates. If we did not do that, then you would feel like you don't want to sell the property because it's going to push you into these large high tax brackets, which would have a downward or dragging effect on the economy because people would be reluctant to trade and whatnot. So key sections of Form 4797, Part 1. So it's used for reporting the sale of property held for one year or less. These are short term gains or losses, which might be more likely taxed at the ordinary higher tax rates rather than a preferential tax rate. So Part 2, used for reporting the sale of property held for more than one year, long term gains or losses. Part 3, used for calculating the ordinary gains and recapture amounts for certain types of properties such as depreciable real estate and equipment that has been depreciated. So this recapture thing is a whole nother kind of topic in and of itself because what ends up happening is if you buy like equipment and then you depreciate the equipment and usually the IRS has accelerated depreciation methods, they might give you like even a 179 or special depreciation. When you deduct the depreciation, you're getting a tax deduction at ordinary income tax rates. But what if you sell the property then and you have a gain? Well, if you had a gain, then then it seems that you might have over depreciated the property, which is likely to happen because they have accelerated depreciation. And if you're able to recognize the gain at favorable tax rates, meaning not ordinary income tax rates, but lower tax rates, it would lead people to try to manipulate the tax system possibly by taking larger deductions for depreciation at ordinary income tax rates and then trying to then recognize the sale at capital gains rates. And so now you have this whole recapture thing because of the changes in the tax rate, which again is these things like the progressive tax rates, having these tiers of taxes and then having different tax rates entirely for things like capital gains and like qualified dividends and things like that, you would think that they seem pretty straightforward, but the rippling effects that they have when you're trying to do tax planning can be significant. The things add up, things get complex over time just because of the varying factors that come into play in the moving landscapes that happen with them. So part number four, used to summarize the information from parts one through three and calculate the total gain or loss to be transferred to your income tax return.