Conventions

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 follows:

• 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.