How to calculate depreciation deduction for an office equipment using half-year convention?
You purchased a laptop for your business on February 7, 2020 to use at 100% in your business.
The laptop cost you $1,000. You decided not to claim Section 179 deduction and no special depreciation.
That was the only asset you placed in service in 2020.
Because you didn’t place any asset in your business during the last quarter of 2020, you don’t need mid-quarter convention. Therefore, you will use Half-Year convention to deduct your business laptop.
You need to go to page 69 of IRS Publication 946 to locate the Appendix A table.
In that table you would locate the name of the depreciation rate table to use in the far right.
Get your Depreciation Spreadsheet ready and complete it.
The video explains how to depreciate a laptop using half-year convention:
Step 1: Complete Depreciation Sheet Step 1 with the asset purchase information
Step2: Locate the rate table name in Appendix A page 69 IRS Publication 946 (2019) or the newer version.
Step 3: Use the information in Appendix A to complete the bottom of Depreciation Spreadsheet Step 1
Step 4: Enter the rates in Depreciation table in Step 2
Step5: Make sure the formula is accurate and the depreciation deduction total match the basis of depreciation
Step 6: Fill in the Tax Year column
Step7: use your depreciation spreadsheet information to complete Form 4562 Part 3 Section B.
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