L-8701 The applicable conventions.

The MACRS depreciation deduction for the year recovery property is placed in service, is disposed of, or is retired, is subject to one of the following three depreciation conventions:

(1) the half-year convention for property other than residential rental or nonresidential real property or railroad gradings and tunnel bores,¹ see L-8703;

(2) the mid-quarter convention when: (a) more than 40% of property subject to the above half-year convention is placed in service during the last three months of the tax year,² see L-8706 et seq.; or (b) when the tax year consists of three months or less regardless of when the property is placed in service during that short tax year;³ or

(3) the mid-month convention for residential rental and nonresidential real property and for railroad grading and tunnel bores,⁴ see L-8713.

¹  Code Sec. 168(d)(1); Code Sec. 168(d)(2).
²  Code Sec. 168(d)(3).
³  Rev Proc 89-15, 1989-1 CB 816.
⁴  Code Sec. 168(d)(2).