Final answer:
When over 40 percent of depreciable personal property costs are obtained in the fourth quarter, the mid-quarter convention is used for depreciation. This convention considers all property as being placed in service at the midpoint of the respective quarter.
Step-by-step explanation:
If more than 40 percent of the depreciable cost of tangible, depreciable personal property is acquired in the fourth quarter of the year, the taxpayer must use the mid-quarter convention to depreciate all depreciable personal property acquired during the year. The mid-quarter convention assumes that all property acquired during any quarter of the year is placed in service at the midpoint of that quarter. This affects the amount of depreciation that can be taken in the year the property is placed in service and subsequent years.