You must use the mid-quarter convention when the total depreciable basis of MACRS property that was placed in service during the last three months of the client's tax year is more than 40% of the total depreciable basis of all MACRS property that was placed in service throughout the entire year. (See IRS Publication 946 for more information.)
Follow these steps to apply the mid-quarter convention.
- Open an asset in Onvio Fixed Assets, then confirm you are in the Depreciation tab.
- Mark the Use Mid-Quarter Convention checkbox in the depreciation grid.
Onvio Fixed Assets automatically determines whether the mid-quarter convention applies to a current year asset and recalculates the asset's depreciation when necessary. It does not automatically determine mid-quarter application for prior year assets. Whenever you exit an asset or force Onvio Fixed Assets to recalculate depreciation, the application totals the business costs of all qualifying assets.
Note: If MACRS property (5, 7, 10, 15, 20, and 25 year) that has been forced to be real property by marking the Designate as Real Property checkbox on the Other tab is to be included in the mid-quarter calculation, you must mark the Include in mid-quarter determination (Force) checkbox. To open this checkbox, click the Mid-Quarter & Section 179 Force Options button in the asset's Other tab.
To determine whether or not the client is required to use the mid-quarter convention, Onvio Fixed Assets applies the mid-quarter test to the cost/basis (adjusted by the business use percentage) in each treatment column for all of the client's appropriate current-year assets. If the mid-quarter convention is required, Onvio Fixed Assets recalculates depreciation for all current-year MACRS assets. If the assets were previously calculated using the mid-quarter convention but it is no longer appropriate, Onvio Fixed Assets recalculates depreciation without applying the mid-quarter convention.
For qualified bonus assets, the mid-quarter determination uses the basis unadjusted for the bonus depreciation.
Assets that have been expensed under section 179 are not included in the mid-quarter determination. However, if an asset has been partially expensed, then the amount subject to depreciation will be included in the calculation.
To explicitly include or exclude assets, or to include a newly entered asset purchased in a prior year in the mid-quarter determination and calculation,mark the Use Mid-Quarter Convention checkbox in the Depreciation table.
To exclude from the mid-quarter calculation MACRS property (7, 10, 15, 20, and 25 yr) that has been forced as real property, you must mark the Exclude from Mid-Quarter Determination (Force) checkbox. To do this, click the Mid-Quarter & Section 179 Force Options button in the asset's Other tab.
