How to depreciate an office furniture using
mid-Quarter convention?
An office furniture
belongs to 7 years property class life
Business A purchased
3 office furniture for business use only in 2020 as follow:
1-15-2020: CEO Chair
for $4,000 (quarter 1)
8-1-2020: Office
Chair for 1,000 (quarter 3)
10-1-2020: Office
Desk for $5,000 (quarter 4)
Calculate the
depreciation deduction for 2020
Business A purchased and placed in service a depreciable asset
in the last quarter of 2020. Therefore, you need to find out if business A is
required to use Mid-Quarter convention.
Since the assets are 100% business use and are placed in
service or ready to be used in the business on the same dates they were purchased,
their purchased cost including sales tax and delivery cost are the cost for
depreciation. Business A is not claiming Section 179 nor special depreciation allowance
on any of the 3 assets.
Total cost for depreciation = Basis for depreciation =
4,000+1,000+5,000 = $10,000
Last quarter asset is $5,000 which is more than 40% of the
total cost for all asset placed in service in 2020 by Business A. Therefore,
you should use mid-quarter convention for all assets placed in service for
2020.
On page 69 of IRS 2019 Publication 946 There is Appendix A
MACRS Percentage Table Guide for GDS and ADS Depreciation Systems.
Refer to that table to locate your asset property class
life, and the name of the depreciation rate table to use that corresponds to
the convention you will use.
Your office furniture is in 7-year property class life and
you will use mid-quarter convention. The depreciation rate tables to use are:
A-2 for quarter 1 asset
A-4 for quarter 3 asset
A-5 for quarter 4 asset (Desk)
And that is if you want to use 200% depreciation method. If
you prefer 150% declining balance method or Straight-line method, you need to
look at the name of the rate table that correspond to their rows.
Now that we took note of the table names, scroll down to
locate them.
Have your spreadsheet ready.
Once you find the rate table for each asset, copy the rate
to your depreciation spreadsheet. Since you are required to use the rate for
all the years you will depreciate the asset once you started to use the rate
from the table, it is a good idea to copy them down so that every year you are
ready to file your business tax, you don’t need to go back and look for the
rate for that year. You have the depreciation deduction for every year on your
spreadsheet to reference. Assuming the basis of depreciation won’t change due
to theft and casualty deduction.
The rate is in the rate table in the property class life
column (7years in this example). Copy all the rate from 7 years column. Because
the recovery period is 8 years, you have 8 rates.
The video explains how to depreciate 7-year property class
lives using mid-quarter convention
Depreciation Spreadsheet-DS22821
Custom Apparel and Stationery
Disclaimer:
“I am not an attorney to practice law. I am not allowed to draft legal documents, give advice on legal matters including immigration, or charge a fee for these activities.” Our articles are informative and based on our knowledge and experience. They are for educational purpose only. Use them at your own discretion.
Affiliate Links Disclaimer:
Our articles contain affiliate links. When you click on one of our affiliate links and make a purchase, we will receive a commission. We thank you very much for your support!
Please Find About our Products and Links Below
Free Download
Would you please check the “Free Download” section on our website for budget spreadsheet, budget planner PDF, tax forms, motivational quotes, checklists, and more for you do download. You don’t need to subscribe to access them. We would like to have you in our community where we interact and encourage each other to reach our goals. We invite you to join our email list, but it is not required to download from Free downloads.
https://ninasoap.com/free-downloads/
Our Objectives
At Nina’s Soap (Liberman Consulting L.L.C.), you would find information to live a quality life within budget and increase your net worth. Topics covered include personal finance, investment, business management, cooking from scratch and growing some vegetables and fruit to save money and eat healthy.
For more, would you please check our blog:
Contact Information: care@ninasoap.com
You Tube Channel:
Are you a visual type person? We got you covered! You can watch video contents including how to file your business tax returns yourself at:
https://www.youtube.com/c/LibermanConsultingLLC
Liberman Consulting L.L.C. Podcast:
Do you like to listen to podcast while you are busy working to maximize your time and learn at the same time? You can listen to contents including how to save money and create multiple sources of income at:
https://www.buzzsprout.com/1585738/
Join Us for Free
You are invited to join us where you could ask questions, stay motivated and work toward reaching your financial goals.
How to Find Previous Articles
To make it easy to navigate our website, would you please check the side bar? Under “Post Archives”, are our “categories”. The links to our prior articles are saved under their appropriate categories. Would you please click on any category under “Post Archives” to read the titles of previous articles and click on the link of your interest to open the article.
Welcome to Our Financial Success Group!
To learn more tips on how to live below your income without sacrificing the quality of your life and start building wealth, would you please join our community for FREE by subscribing here:
https://ninasoap.com/membership-join/
Our Online Stores
Welcome to Nina’s Soap our Natural Products Store
Our Online Stores
Welcome to Nina’s Soap our Natural Products Store
Natural soaps are handmade with quality grade natural unrefined oils and butters, food grade sodium hydroxide, and herbs grown in our garden without pesticide or chemical fertilizer—- no additives, no fragrance, no dye.
Towels, washcloths, and cloth napkins are natural and eco-friendly alternatives of paper towels, paper napkins, and tissue papers for you to enjoy in the comfort of your home while saving money and the environment.
Best Seller: Nina’s Soap Flour Sack Individual Hand Towel – Set of 5: Small size cloth napkins to use as individual hand towels in the bathroom instead of paper towels or as napkin in the kitchen for family dinners:
https://ninassoap.com/product/ninas-soap-flour-sack-hand-towel-set-of-5/
Welcome to Liber Label our Apparel Store
Customs design clothing, home décor, accessories, and stationery with motivational quotes to lift your mood every day.
Business planner inserts, business tax checklist, to do list, many printable of our digital downloads can be purchased here and shipped directly to your door.
Welcome to LiberOutlet.com our Resale Store
New and used office supplies, toys, small kitchen appliances, household products, packaging supplies at a bargain price.
Welcome to Liberdownload.com, Digital Products Store
Budget and Monthly Expense Tracker, Checklist to create your online store, Inventory and Sales Excel Template…tools you need to manage your money, start and run your business successfully, and reach your financial success.
If you are a Sole Proprietor, a Limited Liability Company (LLC), an S Corporation, or an LLC taxed as an S Corporation, articles and videos on our channel would be helpful to file your business tax returns. If you need more help and would like to meet with us, would you check if our Group meeting session is the best fit for you.
Business Consulting Session: Virtual Group Meeting for new Business Owners that need help organizing their business income and expenses and be able to file business taxes themselves:
Small Business Group Session-Quarter 1:
https://liberdownload.com/downloads/small-business-group-session-quarter-1/
Small Business Group Session-Quarter 2:
https://liberdownload.com/downloads/small-business-group-session-quarter-2/
Small Business Group Session-Quarter 3:
https://liberdownload.com/downloads/small-business-group-session-quarter-3/
Small Business Group Session-Quarter 4:
https://liberdownload.com/downloads/small-business-group-session-quarter-4/
Affiliate Links:
Bluehost: We host our websites at Bluehost and like their service. They take the time over the phone to help solve website issues
https://www.bluehost.com/track/ninasoap/
Please Register for Free
Leave a Comment
You must be logged in to post a comment.