MACRS Depreciation: Mid-Quarter Convention
Quick answer
The mid-quarter convention replaces the half-year default when more than 40% of the depreciable basis of personal property placed in service during the year falls in the last three months (IRC §168(d)(3)). Each asset is then treated as placed in service at the midpoint of its quarter. Real property is excluded from the 40% test.
Mid-Quarter Convention is tested on EA Exam Part 2 (Business Income & Deductions). Primary IRS reference: IRC § 168(d)(3).
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About this EA exam topic
The mid-quarter convention applies when more than 40% of the year’s depreciable property is placed in service in the last quarter. It changes the first-year depreciation based on the quarter the asset was placed in service.
The EA exam tests the 40% trigger and recognizing when mid-quarter (not half-year) must be used.
What you'll be tested on
- The 40%-in-last-quarter trigger for mid-quarter
- Quarter-based first-year depreciation
- Interaction with the half-year default
- Which assets count toward the 40% test
How to prepare
- Test the 40% rule before defaulting to half-year.
- Exclude real property from the 40% computation.
- Use the mid-quarter tables when triggered.
Practice questions for Mid-Quarter Convention
What this topic covers
Mid-Quarter Convention appears in Part 2: Business Taxation within the Business Income & Deductions domain. VantageEA practice questions focus on how macrs depreciation rules are applied in realistic EA exam fact patterns.
What candidates practice
Candidates practice identifying tested facts, choosing the best multiple-choice answer, and reviewing explanations tied to IRC § 168(d)(3), IRS Publication 946. This topic supports timed 100-question PSI-style mock tests and shorter topic review sessions.
Related practice-question themes include macrs, depreciation, mid-quarter-convention, 40-percent-test.
Topic overview
Official IRS sources
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Frequently asked questions
When does the mid-quarter convention apply?
When more than 40% of the year’s depreciable (personal) property is placed in service during the last quarter.
Which part?
Part 2 (Businesses).
Reference?
IRS Publication 946.
Continue studying
More Business Income & Deductions topics from Part 2
Business Deductions: Business Deductions (Travel, Meals, Home Office)
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MACRS Depreciation: Depreciation Methods (200% DB, 150% DB, Straight-Line)
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MACRS Depreciation: Alternative Depreciation System (ADS)
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MACRS Depreciation: Half-Year Convention & MACRS Tables
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MACRS Depreciation: Property Classes & Recovery Periods
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MACRS Depreciation: Section 179 Interaction with MACRS
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