[Code of Federal Regulations] [Title 26, Volume 2] [Revised as of April 1, 2004] From the U.S. Government Printing Office via GPO Access [CITE: 26CFR1.168(d)-1T] [Page 1040-1041] TITLE 26--INTERNAL REVENUE CHAPTER I--INTERNAL REVENUE SERVICE, DEPARTMENT OF THE TREASURY (CONTINUED) PART 1_INCOME TAXES--Table of Contents Sec. 1.168(d)-1T Applicable conventions--Half-year and mid-quarter conventions (temporary). (a) through (b)(2) [Reserved]. For further guidance, see Sec. 1.168(d)-1(a) through (b)(2). (b)(3) Property placed in service and disposed of in the same taxable year--(i) Under section 168(d)(3)(B)(ii), the depreciable basis of property placed in service and disposed of in the same taxable year is not taken into account in determining whether the 40-percent test is satisfied. However, the depreciable basis of property placed in service, disposed of, subsequently reacquired, and again placed in service, by the taxpayer in the same taxable year must be [[Page 1041]] taken into account in applying the 40-percent test, but the basis of the property is only taken into account on the later of the dates that the property is placed in service by the taxpayer during the taxable year. Further, see Sec. 1.168(i)-6T(c)(4)(v)(B) and Sec. 1.168(i)-6T(f) for rules relating to property placed in service and exchanged or involuntarily converted during the same taxable year. (ii) The applicable convention, as determined under this section, applies to all depreciable property (except nonresidential real property, residential rental property, and any railroad grading or tunnel bore) placed in service by the taxpayer during the taxable year, excluding property placed in service and disposed of in the same taxable year. However, see Sec. 1.168(i)-6T(c)(4)(v)(A) and Sec. 1.168(i)- 6T(f) for rules relating to MACRS property that has a basis determined under section 1031(d) or section 1033(b). No depreciation deduction is allowed for property placed in service and disposed of during the same taxable year. However, see Sec. 1.168(k)-1T(f)(1) for rules relating to qualified property or 50-percent bonus depreciation property, and Sec. 1.1400L(b)-1T(f)(1) for rules relating to qualified New York Liberty Zone property, that is placed in service by the taxpayer in the same taxable year in which either a partnership is terminated as a result of a technical termination under section 708(b)(1)(B) or the property is transferred in a transaction described in section 168(i)(7). (b)(3)(iii) through (d)(1) For further guidance, see Sec. 1.168(d)- 1(b)(3)(iii) through (d)(1). (d)(2) Qualified property, 50-percent bonus depreciation property, or qualified New York Liberty Zone property. This section also applies to qualified property under section 168(k)(2) or qualified New York Liberty Zone property under section 1400L(b) acquired by a taxpayer after September 10, 2001, and to 50-percent bonus depreciation property under section 168(k)(4) acquired by a taxpayer after May 5, 2003. This section expires on September 4, 2006. (3) Like-kind exchanges and involuntary conversions. (i) The last sentence in paragraph (b)(3)(i) and the second sentence in paragraph (b)(3)(ii) of this section apply to exchanges to which section 1031 applies, and involuntary conversions to which section 1033 applies, of MACRS property for which the time of disposition and the time of replacement both occur after February 27, 2004. (ii) The applicability of this section expires on or before February 27, 2007. [T.D. 9091, 68 FR 52991, Sept. 8, 2003; 68 FR 63734, Nov. 10, 2003; T.D. 9115, 69 FR 9533, Mar. 1, 2004]