Straight-Line Depreciation

(redirected from straight line depreciation)
Also found in: Financial, Encyclopedia.

Straight-Line Depreciation

A method employed to calculate the decline in the value of income-producing property for the purposes of federal taxation.

Under this method, the annual depreciation deduction that is used to offset the annual income generated by the property is determined by dividing the cost of the property minus its expected salvage value by the number of years of anticipated useful life.

Mentioned in ?
References in periodicals archive ?
Some of the best real estate appraisers in the United States were consulted for their opinions regarding the assumptions made in using a straight line depreciation rate of 20/o in projecting the future values of frame residential properties.
Also, the asset's salvage value will be zero, the firm's weighted average cost of capital is k = 10%, the corporate tax rate is 33%, and straight line depreciation over the 20 year economic life of the asset is used by both the firm and the tax authorities.
The benefits of a cost segregation study far outweigh the cost as typically 15% to 45% or more of a building's assets can be reclassified from a 39-year straight line depreciation schedule to a five or seven year accelerated period.
We support legislative efforts to strengthen the depreciation and recapture provisions applicable to the sale of real property by rejecting or repealing discriminatory provisions which limit or disallow existing deductions and by making subject to recapture only that portion of depreciation taken that exceeds straight line depreciation.
If the taxpayer does not use cost segregation, it must use straight line depreciation over 39 years.
For the same asset, the use of straight line depreciation, higher salvage values or longer useful lives will result in higher carrying values and thus increased probability of recognizable impairment losses.