skip navigation

Search Help
Navigation Help
Topic Index
ABCDEFGHI
JKLMNOPQR
STUVWXYZ#
International
Tax Topic Index
FAQs
Forms
Publications
Tax Topics
Comments
About Tax Map
IRS.gov Website
Publication 946
Left Arrow Previous Page | Table of Contents | Index | Next Page Right Arrow
taxmap/pubs/p946-024.htm#en_us_publink1000107538

Which Convention Applies?(p38)

rule
previous topic occurrence Depreciation next topic occurrence

Words you may need to know (see Glossary)

Under MACRS, averaging conventions establish when the recovery period begins and ends. The convention you use determines the number of months for which you can claim depreciation in the year you place property in service and in the year you dispose of the property.
taxmap/pubs/p946-024.htm#en_us_publink1000107539

The mid-month convention.(p38)

rule
Use this convention for nonresidential real property, residential rental property, and any railroad grading or tunnel bore.
Under this convention, you treat all property placed in service or disposed of during a month as placed in service or disposed of at the midpoint of the month. This means that a one-half month of depreciation is allowed for the month the property is placed in service or disposed of.
Your use of the mid-month convention is indicated by the "MM" already shown under column (e) in Part III of Form 4562.
taxmap/pubs/p946-024.htm#en_us_publink1000107540

The mid-quarter convention.(p38)

rule
Use this convention if the mid-month convention does not apply and the total depreciable bases of MACRS property you placed in service during the last 3 months of the tax year (excluding nonresidential real property, residential rental property, any railroad grading or tunnel bore, property placed in service and disposed of in the same year, and property that is being depreciated under a method other than MACRS) are more than 40% of the total depreciable bases of all MACRS property you placed in service during the entire year.
Under this convention, you treat all property placed in service or disposed of during any quarter of the tax year as placed in service or disposed of at the midpoint of that quarter. This means that 11/2 months of depreciation is allowed for the quarter the property is placed in service or disposed of.
If you use this convention, enter "MQ" under column (e) in Part III of Form 4562.
EIC
For purposes of determining whether the mid-quarter convention applies, the depreciable basis of property you placed in service during the tax year reflects the reduction in basis for amounts expensed under section 179 and the part of the basis of property attributable to personal use. However, it does not reflect any reduction in basis for any special depreciation allowance.
taxmap/pubs/p946-024.htm#en_us_publink1000107542

The half-year convention.(p38)

rule
Use this convention if neither the mid-quarter convention nor the mid-month convention applies.
Under this convention, you treat all property placed in service or disposed of during a tax year as placed in service or disposed of at the midpoint of the year. This means that a one-half year of depreciation is allowed for the year the property is placed in service or disposed of.
If you use this convention, enter "HY" under column (e) in Part III of Form 4562.
Left Arrow Previous Page | Table of Contents | Top of Page | Index | Next Page Right Arrow