Remaining Value Over Remaining Life Conventions

The remaining value over remaining life methods use the following conventions:

RV uses a full-month convention in calculating depreciation allowances. The full-month convention allows an asset a full month's worth of depreciation in the month that you place the asset in service. Conversely, no depreciation is allowed in the month of disposal. The full-month convention applies to all property types. See Full-Month Convention for more details.

RH uses the half-year convention in calculating depreciation allowances. One-half of a full year's depreciation is allowed for the asset in its first year placed in service, regardless of when you actually placed it in service during that year. The rules for the depreciation taken in the year of disposal vary depending on when it is disposed. See Half-Year Convention for more details.

RM uses a midmonth convention in calculating depreciation allowances. The midmonth convention treats the asset as though it were placed in service or disposed at the mid-point of a month. A half-month’s depreciation is allowed in both the month of acquisition and the last month of the asset’s life (whether disposed before the end of its life or not). See Midmonth Convention for MACRS Real Property for more details.

Note: If you convert an asset to a RV/RL method from any other method, the convention type associated with the former method is disregarded, and the asset's remaining life is determined as though the new convention had been used in the acquisition year.