How does the depreciation calculation differ for non-residential MACRS if the purchase month differs from December?

In the context of non-residential property under the Modified Accelerated Cost Recovery System (MACRS), when the purchase occurs in a month other than December, the mid-month convention becomes crucial for calculating depreciation. This convention stipulates that regardless of when the asset was purchased during the month, it is treated as being acquired in the middle of that month for depreciation purposes.

Using the mid-month table allows for a more accurate calculation of depreciation reflecting the time the asset was held during the first year. Essentially, rather than depreciating the asset for a full year from the actual purchase date, you apply a percentage that corresponds to six months of depreciation, as it assumes the asset is in use starting mid-month.

This method provides a way to allocate expenses fairly according to the actual month the asset was placed in service, ensuring that the financial statements accurately reflect the cost of using the asset. In contrast, methods like applying a flat percentage of 12 months or not allowing depreciation at all wouldn't align with the principles of accurately matching expenses with revenues.