Re: Re: Re: Re: Tubas- Are they Tax Deductible?

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Posted by LawbyDay/TubabyNight on April 29, 2002 at 09:48:50:

In Reply to: Re: Re: Re: Tubas- Are they Tax Deductible? posted by js on April 28, 2002 at 23:29:15:

OK, here's the research (which is case law,not regualtions), which suggests more ambiguity than I thought (the last time I looked at the issue ten years ago, there was only the 1988 case), since the tax court is split and the IRS did not acquiesce with one of the cases, and there is a contrary private letter ruling out there. Bottom line, BEWARE, and hire a good tax lawyer, before you deduct your vintage York or Alexander.

(3) Musical Instruments
Issues have also been raised with respect to the treatment of valuable musical instruments. In Browning v. Comr., fn590 the court held that a musician could not claim depreciation deductions for three antique violins because he failed to meet his burden of proving the useful life and salvage value of the violins. The Tax Court noted in its decision that violins such as a Stradivarius are considered collectible items and have value as such which makes them more like pieces of art. However, in Liddle v. Comr., fn591 the court held that a valuable bass violin used by a professional musician in his trade was subject to an allowance for depreciation, even though the violin actually increased in value while held by the taxpayer. The court determined that the taxpayer would be entitled to deprecation deductions under ACRS if taxpayer demonstrated that the bass was subject to exhaustion and wear and tear. The taxpayer was not required to prove the bass had a determinable useful life because the specific recovery periods under ACRS represented such useful life. The court found the IRS's "work of art" theory unpersuasive because in the taxpayer's hands, the bass was a tool of his trade and not a work of art. Similarly, in Simon v. Comr., fn592 the court held that professional musicians could take ACRS depreciation deductions on 19th century violin bows used in their trade or business. fn593
/Footnote/ 590: 890 F.2d 1084 (9th Cir. 1989), aff'g 55 T.C.M. 1232 (1988).
/Footnote/ 591: 65 F.3d 329 (3d Cir. 1995), aff'g 103 T.C. 285 (1994).
/Footnote/ 592: 68 F.3d 41 (2d Cir. 1995), nonacq., 1996-2 C.B. 2.
/Footnote/ 593 But see PLR 8641006 (IRS ruled that a cello deemed comparable to a Stradivarius violin was similar to nondepreciable artwork).

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