The property’s convention determines the number of months for which you can claim depreciation in the year you place property in service and the year you dispose of the property.
If you enter the date placed in service, select a category and a sub-category, the Fixed Assets form automatically assigns the Method, Recovery Period, and Convention.
Use if neither the mid-month or mid-quarter conventions apply.
Under this convention, property placed in service or disposed of during the year is treated as placed in service or disposed of at the midpoint of the year.
Use for nonresidential real property, residential rental property, and any railroad grading or tunnel bore.
Under this convention, all property placed in service of disposed of during a month is considered placed in service or disposed of at the midpoint of the month. This means that you can claim one-half of the month’s depreciation for property placed in service or disposed of during that month.
The mid-quarter convention treats property placed in service during any quarter of the tax year or disposed of during any quarter of the tax year as placed in service or disposed of at the midpoint of the quarter.
The MACRS deduction for property subject to the mid-quarter convention may be determined by figuring the depreciation for a full tax year and then multiplying that amount by the applicable percentage of 87.5% for the first quarter.
The mid-quarter convention treats property placed in service during any quarter of the tax year or disposed of during any quarter of the tax year as placed in service or disposed of at the midpoint of the quarter.
The MACRS deduction for property subject to the mid-quarter convention may be determined by figuring the depreciation for a full tax year and then multiplying that amount by the applicable percentage of 62.5% for the second quarter.
The mid-quarter convention treats property placed in service during any quarter of the tax year or disposed of during any quarter of the tax year as placed in service or disposed of at the midpoint of the quarter.
The MACRS deduction for property subject to the mid-quarter convention may be determined by figuring the depreciation for a full tax year and then multiplying that amount by the applicable percentage of 37.5% for the third quarter.
The mid-quarter convention treats property placed in service during any quarter of the tax year or disposed of during any quarter of the tax year as placed in service or disposed of at the midpoint of the quarter.
The MACRS deduction for property subject to the mid-quarter convention may be determined by figuring the depreciation for a full tax year and then multiplying that amount by the applicable percentage of 12.5% for the fourth quarter.
Under a full-month convention, property placed in service at any time during a given month is treated as if it had been placed in service on the first of that month. This allows you to take depreciation for the entire month in which you place the asset in service. If you dispose of the property before the end of the recovery period, no depreciation is allowed for the month in which you dispose of the property.
Assets are assigned to this method when they are imported from other software and the Fixed Assets form does not have the same convention. In order to calculate future depreciation after importing, you will need to assign a convention supported by the ATX 2014.
Use this convention for land and other non-depreciable assets.
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