Midmonth Convention

For ACRS and MACRS real property: A midmonth convention applies to ACRS real property placed in service after June 22, 1984, and to MACRS residential rental and nonresidential real property (that is, 27.5-, 31.5-, and 39-year property). Such property is treated as though it were placed in service or disposed of in the middle of the month. A half-month's depreciation is allowed both in the month of acquisition and in the month of disposition.

For nonrecovery property: A different midmonth convention applies to assets depreciated by methods other than ACRS and MACRS. For these methods, if you place the asset in service after the 15th of the month, no depreciation is taken for that month. If you place the asset in service before the 16th of the month, a full month's depreciation is allowed.

Similarly, if you dispose of the asset before the 16th of the month, no depreciation is taken for that month. If you dispose of the asset after the 15th of the month, a full month's depreciation is allowed.