Per Diem Rates from the U.S. General Services Administration
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Rates are set by fiscal year, effective October 1 each year. Find current rates in the continental United States ("CONUS Rates").
Depreciation Conventions
Depreciation conventions determine which depreciation table to use and how much depreciation you may deduct each year of the property's the recovery period.
Half-year Convention
The half-year convention assumes you placed property in service in the middle of the year even if it was placed in service at the beginning of the year. For example, if you place property in service between January and September (the first nine months of a calendar year), you must use the half-year convention.
The half-year convention also assumes that when you dispose of property, you disposed of it in the middle of the year, even if you disposed of it on January 1.
Under the half-year convention, in the year property is placed in service you may only deduct one-half of the annual depreciation, similarly, in the year property is disposed of you may only deduct one-half of the annual depreciation. In effect, this means, depreciation of 5-year property is claimed over 6-years (four full years and two half years).
Mid-quarter convention
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 the total annual cost of qualified property equals $50,000, which includes $30,000 in purchases made in last quarter of the year, the mid-quarter convention must be used (last quarter cost: $30,000 / total annual cost: $50,000 = 60%).
The depreciation table used for the mid-quarter convention is divided into four quarters. Each quarter includes the depreciation rates for each year of the asset's recovery period. The depreciation rate for each year is applied to each individual asset for each year of its recovery period. The rate used for each asset depends on the quarter the asset was placed in service. If the 40% test is not met, the half-year convention must be used.
Mid-month Convention
The mid-month convention applies to realty, such as residential rental property and nonresidential real property. Under the mid-month convention, property is treated as placed in service or disposed of at the midpoint of the applicable month. Only the straight-line method may be used for realty.