MACRS simplifies the way you figure your deduction
by providing three preset conventions. These conventions determine the number
of months for which you claim depreciation in the year you place property in
service and in the year you dispose of the property. The conventions are as
- Mid-month convention -- Use this convention for all nonresidential
real property and residential rental property.
- Mid-quarter convention -- Use this convention if the basis of
property placed in service during the last three months of the tax year (excluding
nonresidential real property, residential rental property, and property placed
in service and disposed of in the same year) is more than 40% of the total
bases of all property placed in service for the entire year.
- Half-year convention -- Use this convention for all other property.