Simon v. Comm'r

Ruwe, J., concurring: In this case, section 168 is being applied to violin bows used by professional violinists. Everyone would ordinarily agree that such an asset is the “type” of asset that would be subject to an allowance for depreciation.

Under section 167, depreciation was allowed over the useful life of the asset in order to allow taxpayers to deduct the anticipated loss in value attributable to wear and tear. This, in turn, required the often difficult task of proving the useful life and salvage or residual value of the asset. In a significant step in the direction of tax simplification, both of these requirements were eliminated by section 168, which specifies the number of years over which the cost of certain types of assets may be deducted and eliminates the need to calculate salvage or residual value in order to determine the expected economic loss.

Everyone seems to favor tax simplification until the simplified law is actually applied to a real set of facts and produces a less-than-perfect result. The dissenting opinions would resurrect the obligation to establish an asset’s actual expected useful life and the actual expected decrease in value over that life, in order to qualify for a section 168 deduction. It is unclear whether the dissenters intend to limit their analyses to assets that are “works of art”, whatever that term may mean. However, their legal theories would seem to apply to any case where the Commissioner raises the useful life and value issues.

I can understand the dissenters’ concern that section 168 might allow an asset to be written off over a period much shorter than its actual useful life and that the entire cost might be deducted despite the fact that there might be no actual economic decrease in value. However, that is the price of the tax simplification implicit in section 168.

Parker, Cohen, Swift, Wright, Parr, Wells, and Beghe, JJ., agree with this concurring opinion.