Treasury Regulations · 26 CFR
§ 1.167(b)-1. Straight line method.
Regulation text, no changes From the eCFR, current as of October 15, 2026. The eCFR is an authoritative but unofficial editorial compilation of the Code of Federal Regulations; the official text is the annual CFR on govinfo. Compare it with this section on ecfr.gov (external site) or the official annual CFR on govinfo (external site).
Regulation under 26 U.S.C. § 167(b)
Cite as 26 CFR § 1.167(b)-1
At a glance
Read from the text and its source citation. Not part of the regulation.
- Status
- In the current eCFR
- Source
- T.D. 6500, 25 FR 11402, Nov. 26, 1960; 25 FR 14021, Dec. 21, 1960; T.D. 9989, 89 FR 17606, Mar. 11, 2024, unless otherwise noted.
- Issued under
- 26 U.S.C. § 167(b)
- Length
- 835 words · about 4 min to read
- Cross-references
- cites 1 Code section and 0 regulations; cited by 10
Under the straight line method items may be depreciated separately:
| Year and item | Cost or other basis less salaries | Useful life (years) | Depreciation allowable | ||
|---|---|---|---|---|---|
| 1954 | 1955 | 1956 | |||
| 1954: | |||||
| Asset A | $1,600 | 4 | 1 $200 | $400 | $400 |
| Asset B | 12,000 | 40 | 1 150 | 300 | 300 |
| 1 In this example it is assumed that the assets were placed in service on July 1, 1954. | |||||
In group, classified, or composite accounting, a number of assets with the same or different useful lives may be combined into one account, and a single rate of depreciation, i.e., the group, classified, or composite rate used for the entire account. In the case of group accounts, i.e., accounts containing assets which are similar in kind and which have approximately the same estimated useful lives, the group rate is determined from the average of the useful lives of the assets. In the case of classified or composite accounts, the classified or composite rate is generally computed by determining the amount of one year's depreciation for each item or each group of similar items, and by dividing the total depreciation thus obtained by the total cost or other basis of the assets. The average rate so obtained is to be used as long as subsequent additions, retirements, or replacements do not substantially alter the relative proportions of different types of assets in the account. An example of the computation of a classified or composite rate follows:
| Cost or other basis | Estimated useful life (years) | Annual depreciation |
|---|---|---|
| $10,000 | 5 | $2,000 |
| 10,000 | 15 | 667 |
| 20,000 | 2,667 |
Average rate is 13.33 percent ($2,667 ÷ $20,000) unadjusted for salvage. Assuming the estimated salvage value is 10 percent of the cost or other basis, the rate adjusted for salvage will be 13.33 percent minus 10 percent of 13.33 percent (13.33%−1.33%), or 12 percent.
The use of the straight line method for group, classified, or composite accounts is illustrated by the following example: A taxpayer filing his returns on a calendar year basis maintains an asset account for which a group rate of 20 percent has been determined, before adjustment for salvage. Estimated salvage is determined to be 6 2/3 percent, resulting in an adjusted rate of 18.67 percent. During the years illustrated, the initial investment, additions, retirements, and salvage recoveries, which were determined not to change the composition of the group sufficiently to require a change in rate, were assumed to have been made as follows:
1954—Initial investment of $12,000.
1957—Retirement $2,000, salvage realized $200.
1958—Retirement $2,000, salvage realized $200.
1959—Retirement $4,000, salvage realized $400.
1959—Additions $10,000.
1960—Retirement $2,000, no salvage realized.
1961—Retirement $2,000, no salvage realized.
| Year | Asset balance Jan. 1 | Current additions | Current retirements | Asset balance Dec. 31 | Average balance | Rate (percent) | Allowable depreciation |
|---|---|---|---|---|---|---|---|
| 1954 | $12,000 | $12,000 | $6,000 | 18.67 | $1,120 | ||
| 1955 | $12,000 | 12,000 | 12,000 | 18.67 | 2,240 | ||
| 1956 | 12,000 | 12,000 | 12,000 | 18.67 | 2,240 | ||
| 1957 | 12,000 | $2,000 | 10,000 | 11,000 | 18.67 | 2,054 | |
| 1958 | 10,000 | 2,000 | 8,000 | 9,000 | 18.67 | 1,680 | |
| 1959 | 8,000 | 10,000 | 4,000 | 14,000 | 11,000 | 18.67 | 2,054 |
| 1960 | 14,000 | 2,000 | 12,000 | 13,000 | 18.67 | 2,427 | |
| 1961 | 12,000 | 2,000 | 10,000 | 11,000 | 18.67 | 2,054 |
| Year | Depreciation reserve Jan. 1 | Depreciation allowable | Current retirements | Salvage realized | Depreciation reserve Dec. 31 |
|---|---|---|---|---|---|
| 1954 | $1,120 | $1,120 | |||
| 1955 | $1,120 | 2,240 | 3,360 | ||
| 1956 | 3,360 | 2,240 | 5,600 | ||
| 1957 | 5,600 | 2,054 | $2,000 | $200 | 5,854 |
| 1958 | 5,854 | 1,680 | 2,000 | 200 | 5,734 |
| 1959 | 5,734 | 2,054 | 4,000 | 400 | 4,188 |
| 1960 | 4,188 | 2,427 | 2,000 | 4,615 | |
| 1961 | 4,615 | 2,054 | 2,000 | 4,669 |
Cross-references
Computed from the citations in the text of 26 CFR.
Code sections it cites
Cited by 10 other regulations
- § 1.57-1 Items of tax preference defined.
- § 1.167(a)-1 Depreciation in general.
- § 1.167(a)-7 Accounting for depreciable property.
- § 1.167(a)-10 When depreciation deduction is allowable.
- § 1.167(a)-11 Depreciation based on class lives and asset depreciation ranges for property placed in service after December 31, 1970.
- § 1.167(a)-14 Treatment of certain intangible property excluded from section 197.
- § 1.167(b)-0 Methods of computing depreciation.
- § 1.167(b)-2 Declining balance method.
- § 1.167(b)-3 Sum of the years-digits method.
- § 1.312-15 Effect of depreciation on earnings and profits.
Where it sits in 26 CFR
- Subchapter A Income tax
- Part 1 Income taxes
- Itemized Deductions for Individuals and Corporations
Nearby sections
- § 1.167(a)-12 Depreciation based on class lives for property first placed in service before January 1, 1971.
- § 1.167(a)-13T Certain elections for intangible property (temporary).
- § 1.167(a)-14 Treatment of certain intangible property excluded from section 197.
- § 1.167(b)-0 Methods of computing depreciation.
- § 1.167(b)-1 Straight line method.
- § 1.167(b)-2 Declining balance method.
- § 1.167(b)-3 Sum of the years-digits method.
- § 1.167(b)-4 Other methods.
- § 1.167(c)-1 Limitations on methods of computing depreciation under section 167(b) (2), (3), and (4).