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"MID-QUARTER CONVENTION" IS WAIVED FOR CALENDAR YEAR TAXPAYERS

November 09, 2001

The IRS has announced that taxpayers may compute depreciation on assets purchased in the current tax year without regard to the "mid-quarter convention" if the third quarter of the tax year includes September 11, 2001.

Normally, fixed assets placed in service during a taxable year are depreciated using the "half-year convention" -- meaning that depreciation is computed as if the assets were placed in service in the middle of the year.

If, however more than 40% of depreciable assets are placed in service in the last three months of a tax year, the "mid-quarter convention" applies. Under "mid-quarter," depreciation is computed for each asset as f it were placed in services at the midpoint of the quarter in which it was placed in service; for example, an asset placed in service in the 4th quarter would get 1/8 year depreciation.

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