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Court Tax Case

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During the current year, Danny - a calendar-year taxpayer - acquired and placed in service the following business assets:

January: Delivery trucks $ 55,000

March: real estate building 150,000 used for warehouse.

June: Computer system 35,000

September: Automobile 25,000

November: Office equipment 95,000

Which convention(s) is(are) used to figure Danny's depreciation for the current year and why?

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Solution Summary

The court taxpayers calendars are examined.

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First, there are 3 conventions:

1. Half Year: assumes assets were purchased on average at the midpoint during the year no matter when they were actually purchased. This is the normal convention unless the mid-quarter or the mid-month convention is required.

2. Mid Quarter: only applies when more than 40% of the total costs of assets were placed in service in the last three months of the year. This convention applies to personal property only because real estate is already ...

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