MACRS Formula Conventions

Under MACRS, the half-year convention is used for 3-, 5-, 7-, 10-, 15-, 20-, and 25-year property, with assets earning a half year's depreciation in the year they were acquired. Unlike ACRS, MACRS also allows a half year's depreciation in the year of disposition. (There is an exception, however, for tax years ending after 1/30/91. If you acquire and dispose of an asset in the same tax year, no depreciation is allowed.) Residential rental and nonresidential real property (that is, 27.5-, 31.5-, and 39-year MACRS property) use a special midmonth convention giving a half month of depreciation both in the month of acquisition and in the month of disposal.

Under MACRS, a midquarter convention was added. This convention is required for all qualifying MACRS property (generally, personal property) placed in service in a taxable year, if more than 40 percent of the depreciable value of such property is placed in service during the last 3 months of the taxable year. Under this convention, the annual allowable depreciation is multiplied by: