Mid-Quarter Convention: The 40% Test With an Example

Add up the basis of personal property placed in service in the year (excluding real property and property expensed under §179). If more than 40% of it was placed in service in the last quarter, the mid-quarter convention applies to all of it (Pub 946 ch. 4). Each asset is treated as placed in service in the middle of its quarter.

Example

$10,000 of 5-year property placed in service in November 2020 is depreciated at 5%, 38% and 22.8% (Table A-5). Sold in April 2023, year 4 gets 13.68% × 1.5 / 4 quarters = 513.00.

Last reviewed 2026-10-28. General information, not tax advice. IRS Publication 946, the Form 4562 instructions and your tax adviser decide what applies.