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Level 3

Why my calculation of depreciation expense is different from Turbotax

House: \$236,580

Land: \$47,316

Date I started using it in business: 8/1/2023

% of Use: 100%

Method: SL

My calculation: (\$236,580-\$47,316)/27.5/365days*153days=\$2,885

TurboTax: \$2,581

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Accepted Solutions
Expert Alumni

Why my calculation of depreciation expense is different from Turbotax

TurboTax uses the mid-month convention for calculating depreciation.

In depreciation, the mid-month convention means that an asset placed into service anytime during a given month is assumed to have been placed into service in the middle of that month. As a result, there'll be one-half month of depreciation in that month. The same is true for the disposal of an asset.

As the property was placed in service in August 2023, it's considered as used in 2023 for 4.5 months, and depreciation is calculated accordingly.

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1 Reply
Expert Alumni

Why my calculation of depreciation expense is different from Turbotax

TurboTax uses the mid-month convention for calculating depreciation.

In depreciation, the mid-month convention means that an asset placed into service anytime during a given month is assumed to have been placed into service in the middle of that month. As a result, there'll be one-half month of depreciation in that month. The same is true for the disposal of an asset.

As the property was placed in service in August 2023, it's considered as used in 2023 for 4.5 months, and depreciation is calculated accordingly.

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"

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