Don't overlook these!
Updated for 2012
The convention used determines which depreciation table to use and how much depreciation you can deduct each year of property's the recovery period.
If you place property in service between January and September (the first nine months), you must use the half-year convention.
This convention assumes you placed property in service in the middle of the year even if it was placed in service the beginning of the year.
It also assumes that when you dispose of the property, you disposed of it in the middle of the year even if you disposed of it on January 1.
Consequently, in the year the property is placed in service you may only deduct one-half of the annual depreciation and in the year the property is disposed of you may only deduct one-half of the annual depreciation.
This convention considers the cost of business equipment (excluding realty) acquired in the last quarter of the year (October, November, and December).
If the total cost of business equipment acquired in the last quarter of the year exceeds 40% of the total cost of equipment acquired for the entire year, the mid-quarter convention must be used for all property placed in service in that tax year.
For example, if total annual acquisitions equal $50,000, which includes last quarter acquisitions of $30,000 the mid-quarter convention must be used ($30,000/$60,000 = 60%).
The depreciation table used for the mid-quarter convention is divided into four quarters.
This convention applies to realty. Only the straight-line method may be used for realty.
Car Expenses-Depreciation: Depreciating Vehicles
Copyright © 2008-2013 Larry Villano. All rights reserved.