The National Directory of Certified Public Accountants

Ask A CPA - Depreciation

Depreciation - Equipment I Purchased In The Last Quarter Of The Tax Year

If the total cost basis of your business equipment was placed in service during the last 3 months of the tax year exceeds 40% of the total basis of all the property placed in service for the whole year, then a Mid-quarter convention applies. Generally, the first year depreciation will be based as if the assets were placed in service in the middle of the last quarter of the tax year. This result will be a smaller first year calculation than the depreciation calculation using the half year convention.

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