When does the MACRS mid-quarter convention replace the half-year convention?
I know personal property usually uses half-year convention, but I keep missing questions where a fourth-quarter purchase changes the answer.
The mid-quarter convention can replace the half-year convention when the taxpayer places a large share of the year's depreciable personal property in service during the last three months of the tax year. The CPA exam version usually asks whether fourth-quarter personal-property additions exceed the 40% threshold.
Example: A calendar-year business places 60,000 of equipment in service before October and 50,000 in November. Total personal property placed in service is 110,000, and the fourth-quarter portion is 50,000 / 110,000, or about 45.5%. That triggers mid-quarter convention for the year's personal-property additions.
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