Straight-Line Example

For a $14,000 truck placed in service on March 16, 2020, with an estimated life of 6 years and a salvage value of $2,000, the depreciation calculation for the straight-line method looks like this:

	Original cost	$14,000
-	Salvage value	2,000
	Adjusted basis	$12,000

 

Adjusted basis Estimated life

=

$12,000 6

= $2,000

 

Yearly depreciation is $2,000 for the years 2021 through 2025. Under the midmonth convention, the truck is considered to be placed in service in April, so the acquisition year depreciation is 9/12ths of the annual depreciation ($1,500). The deduction for the last year is 3/12ths of the annual depreciation ($500).