Property Valuation
In South Dakota, 'straight-line depreciation' for income tax purposes on a commercial real property assumes:
AThe property depreciates at an accelerated rate in early years
BThe property's value decreases by an equal amount each year over the allowable recovery period✓ Correct
CThe land and improvements depreciate at the same rate
DDepreciation only applies to residential investment properties
Explanation
For federal income tax purposes, commercial real property is depreciated using straight-line depreciation over 39 years (residential rental property over 27.5 years). The annual depreciation deduction is the same amount each year. Land is not depreciable.
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