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One Q4-heavy year can cut your first-year write-off 75% — and the fix is a checkbox on Form 4562.
December equipment buying season hides two traps that cost real money. The mid-quarter convention: if more than 40% of the year's depreciable basis (excluding anything you expense under §179 or bonus) is placed in service in the fourth quarter, EVERY asset that year flips to mid-quarter convention — and a Q4 asset's first-year rate on 5-year property collapses from 20% to 5%. The escape is one election: expense the Q4 purchases and they leave the 40% test entirely. The second trap is cruder: placed in service means installed and operational by December 31 — ordered, paid, or in-transit doesn't count, and a one-day slip moves the entire deduction into next year. This calculator runs the 40% test on your quarterly purchases, prices the trip, and shows the expensing fix.
Owners use it before December buying: over 40% of depreciated basis in Q4 flips everything to mid-quarter convention (20% → 5% first-year on 5-year property) — expensing the Q4 buys exits the test, and a one-day placed-in-service slip defers the whole deduction a year.
Total up the basis of all MACRS property placed in service during the year — after removing anything you expense under §179 or take bonus on. If the Q4 slice exceeds 40%, mid-quarter convention applies to every asset for the year: each is treated as placed in service at the midpoint of its quarter. First-year rates on 5-year property become 35%/25%/15%/5% by quarter instead of a flat 20%. Note the asymmetry: tripping the test HELPS Q1 purchases (35% vs 20%) while crushing Q4 ones — but December-heavy years always lose on net. The test runs on your tax year, so fiscal-year filers use their own fourth quarter.
The asset must be ready and available for its intended use — delivered, installed, and operational. A signed purchase order, a paid invoice, a truck in transit, or equipment sitting in crates all fail. Courts have split on edge cases (a machine that ran one test cycle before midnight generally counts; one awaiting parts does not), but the safe line is operational use before year-end. The 2026 stakes are unusually high because 100% bonus depreciation applies to property both acquired AND placed in service after January 19, 2025 — a January slip doesn't just defer the deduction, it can change which rulebook applies to the acquisition date.
Bunch — but strategically. The §179 cap is $2,560,000 and bonus is a permanent 100%, so a single big year expenses everything at once at your current marginal rate. Spreading only wins when income is lumpy in the other direction (a low-income year wastes deductions) or when the $4,090,000 phaseout is in reach. If you bunch, watch the calendar: Q1–Q3 placement keeps half-year convention clean, and any Q4 remainder gets expensed out of the test. The classic December mistake is the reverse — depreciating Q4 purchases while expensing January ones, which maximizes exactly the basis that trips the 40% line.