## Facts

- Richard L. Simon and Fiona Simon were full-time professional violinists with the New York Philharmonic.
- In 1985, they purchased two nineteenth-century François Tourte violin bows in largely unused condition.
- The Simons used the bows continuously in their performing trade or business.
- Over time, the bows experienced physical deterioration affecting performance quality, even as their fair market value increased as antiques.
- On their 1989 federal income tax return, the Simons claimed ACRS depreciation deductions for the bows under I.R.C. § 168, treating them as tangible business property subject to wear and tear.
- The Commissioner determined a deficiency, asserting the bows were not depreciable because they appreciated in value and allegedly lacked a determinable useful life under traditional depreciation concepts.
- The Simons petitioned the United States Tax Court for redetermination.

## Issues

1. Whether the Tourte bows used in the Simons’ professional performance activity qualified as “recovery property” depreciable under I.R.C. § 168 (ACRS).
2. Whether tangible property that physically wears from business use may be “of a character subject to the allowance for depreciation” under § 168(c)(1) even if it appreciates in fair market value and does not have a determinable useful life under pre-ERTA practice.

## Decision

- The Tax Court held that the Tourte bows were “recovery property” under § 168 and that the Simons were entitled to ACRS depreciation deductions for the year at issue.
- The court found the bows suffered exhaustion and wear and tear from professional use, satisfying § 168(c)(1)’s requirement that the property be of a character subject to depreciation.
- The court rejected the Commissioner’s position that appreciation in market value, or the absence of a determinable useful life in the older § 167 framework, barred depreciation under ACRS.

## Legal Principles

- Under § 168, “recovery property” includes tangible property placed in service after 1980, used in a trade or business (or held for income production), and “of a character subject to the allowance for depreciation.”
- The phrase “of a character subject to the allowance for depreciation” focuses on whether the property suffers exhaustion, wear and tear, or obsolescence through use, rather than on whether the property predictably declines in market value.
- ACRS was enacted to simplify cost recovery through fixed recovery periods and does not require the taxpayer to prove a determinable useful life in the manner associated with pre-ERTA depreciation practice.
- Physical deterioration from business use can support depreciation deductions even when the asset simultaneously increases in collectible or investment value.

## Conclusion

The Tax Court concluded that antique Tourte violin bows used regularly in a professional performance business were depreciable ACRS recovery property because they physically wore from use, and neither appreciation in market value nor the absence of a determinable useful life prevented depreciation under § 168.


Simon v. Commissioner, 103 T.C. 247 (1994)