Taxpayers have until Dec. 31, 2003 to elect out of mid-quarter convention for 2001.

• Author: O'Driscoll, David

Notice 2003-45 allows taxpayers until Dec. 31, 2003 to elect not to apply the mid-quarter convention to property placed in service in the tax year that included 2001, if the third or fourth quarter of the taxpayer's tax year included Sept. 11, 2001.

Under Sec. 168(d)(3), the mid-quarter convention is the applicable depreciation convention for all property placed in service during the tax year, if the aggregate basis of property placed in service during the last three months of the tax year exceeds 40% of the aggregate basis of property placed in service during the tax year.

Notice 2001-70 allowed taxpayers to elect not to apply the mid-quarter convention rules to property placed in service in the tax year that included Sept. 11, 2001, if the third quarter of the taxpayer's tax year included that date. It provided that, pending issuance of regulations, an eligible taxpayer that wished to elect not to apply the mid-quarter convention rules could make the election by writing "Election Pursuant to Notice 2001-70" across the top of Form 4562, Depreciation and Amortization, for the taxpayer's tax year that included Sept. 11,2001.

Notice 2001-74 expanded Notice 2001 70 by permitting taxpayers to elect not to apply the mid-quarter convention rules if the fourth quarter of the taxpayer's tax year included Sept. 11, 2001 .That notice also provided guidance for taxpayers that file Form 2106, Employee Business Expenses, rather than Form 4562, or that file their returns electronically, to elect not to apply the...