(The annual depreciation rate is different in the first and last year the property is placed in service because of the application of the mid-month convention
Property subject to the mid-month convention
is treated as placed in service on the mid-point of the month without regard to whether the taxpayer has a short taxable year.
The percentages are based on an asset life of 39 years, the straight-line method, and the mid-month convention
. Since the residence in the following example was first placed in service during April, the mid-month convention
requires that 8.5 months be used to calculate the cost recovery allowed--eight months for May through December and one half month for April.
Jane estimates her annual indirect expenses for the home office (mortgage interest, real estate taxes, utilities, insurance) at $1,755 and annual depreciation (ignoring the mid-month convention
in the first year) at $508.
The mid-month convention
here was billed as the first regional gathering of Key chapters.
The property wax subject to depreciation using the straight-line method, with a 39-year recovery period and the mid-month convention
. In January 2004, when the property had been depreciated for eight full years, Q exchanged the restaurant for a radio tower, in a Sec.
WELKER, CPA, PKF SAN DIEGO, SAN DIEGO, CA Exhibit 1: 1986 property Assume 19-year ACRS residential real property was placed in service in December 1986; mid-month convention
(Disregard the mid-month convention
for this example.) On Jan.
The classification of such improvements is critical in determining both the method and recovery period--e.g., if the leasehold improvement is classified as commercial real estate, it is required to be depreciated straight-line over 39 years, using the mid-month convention
. However, the classification of property is uncertain.
168(d)(4)(B) mid-month convention
has been ignored.
The buyer and seller of a low-income building may agree to use either the mid-month convention
or the exact number of days in the month of disposition to determine the division of the allowable credit.(48)
31, 1986 is the straight-line-method;(5) the only life available is 27.5 years;(6) and the only convention available is the mid-month convention
, which assumes that all property is placed in service at the midpoint of the month, thereby allowing one-half of a month's depreciation in the first month.(7)