## Facts

- Brian P. Liddle, a full-time professional musician (bass viol player), purchased a 17th-century Ruggeri bass viol in 1984 for $28,000 and insured it based on a $38,000 appraisal.
- Liddle used the instrument as his principal business instrument, practicing up to seven and one-half hours daily and transporting it for rehearsals, performances, and auditions.
- Through continuous professional use, the instrument experienced wear and damage (including nicks, cracks, resin accumulation, and a neck separation requiring repair before it could be played).
- For tax year 1987, the Liddles claimed depreciation on the instrument under I.R.C. § 168 (ACRS), treating it as recovery property used in a trade or business.
- The IRS issued a notice of deficiency disallowing the ACRS depreciation; after concessions, the remaining dispute was whether the 1987 ACRS deduction was allowable.

## Issues

1. Whether a 17th-century bass viol used as a professional musician’s principal instrument qualifies as “recovery property” depreciable under I.R.C. § 168 in 1987.
2. Whether potential appreciation in market value or an exceptionally long physical life prevents depreciation when the property is subject to wear and tear in business use.

## Decision

- The Tax Court held that the bass viol qualified as recovery property and that the taxpayers were entitled to the claimed 1987 ACRS depreciation deduction.
- The court treated the instrument as a business “tool of the trade” used continuously in the taxpayer’s trade or business.
- The court found that the instrument was subject to wear and tear and functional exhaustion from intensive professional use, notwithstanding its antique character and potential to appreciate.
- The court rejected a rule excluding antique, high-value property from ACRS solely due to longevity or appreciation and applied ACRS as a generally mechanical statutory regime once property meets the recovery-property definition.

## Legal Principles

- Property may be depreciable for federal tax purposes when used in a trade or business and subject to wear and tear, even if its market value may increase.
- The relevant inquiry is functional exhaustion in the taxpayer’s business use rather than the asset’s collectible status or theoretical ability to exist indefinitely.
- Under ACRS, once property falls within the statutory definition of recovery property, depreciation generally follows the statutory recovery framework without individualized useful-life proof as a prerequisite.
- Continuous, intensive use of an asset as a “tool of the trade,” with accompanying physical deterioration and need for repair, supports classification as depreciable property under I.R.C. § 168.

## Conclusion

The Tax Court allowed ACRS depreciation for an antique bass viol because it was used continuously in the taxpayer’s musical profession and suffered wear and damage from that use; potential appreciation and exceptional longevity did not bar treatment as depreciable recovery property under I.R.C. § 168.


Liddle v. Commissioner, 103 T.C. 285 (1994)