A soil-structure interaction formulation is used here which is based on consideration of the dynamics of the structure with a free, rather than a fixed, base. This approach is shown to give a quite simple procedure for coupling the dynamic characteristics of the structure to those of the foundation and soil in order to obtain a matrix formulation for the complete system. In fixed-base studies it is common to presume that each natural mode of the structure has a given fraction of critical damping, and since the interaction formulation uses a free-base model, it seems natural for this situation to assign the equal modal damping values to free-base modes. It is shown, though, that this gives a structural model which is significantly different than the one having equal modal damping in the fixed-base modes. In particular, it is found that the damping matrix resulting in equal modal damping values for free-based modes will give a very significantly smaller damping value for the fundamental distortional mode of the fixed-base structure. Ignoring this fact could lead one to attribute dynamic effects to interaction which are actually due to the choice of damping.