taxpayer allowed to deduct depreciation under section 168 on two 19th-century violin bows that appreciated in value
How later courts described this case
- taxpayer allowed to deduct depreciation under section 168 on two 19th-century violin bows that appreciated in value
Written by the judges who cited it.
The opinion
Beghe, J., dissenting: Having concurred in the result of the companion case, Simon v. Commissioner, 103 T.C. 247, 267 (1994) (Beghe, J., concurring), I respectfully dissent in this case. I believe the holdings of the trial judges in these two cases can be harmonized on a narrower ground, and I would uphold the findings and holdings of Judge Laro in Simon and of Special Trial Judge Powell in this case. The differences in the findings of fact in the two cases make it unnecessary to adopt either the broadly stated interpretation of section 168 set forth in the majority opinions, or the overly restrictive views espoused by the dissents.
Judge Laro, the trial judge in Simon, found that the Tourte bows actually did and do suffer substantial wear and tear that will render them unplayable over some indeterminate time. The bows are therefore subject to exhaustion that arguably characterizes them as “property of a character subject to the allowance for depreciation.” On the other hand, Special Trial Judge Powell, whose findings of fact in this case were adopted by Judge Laro and the majority that rejected Special Trial Judge Powell’s proposed contrary holding, not only concluded that the bass viol did not have a “determinable useful life”, but in so doing found that the bass viol had not suffered such wear and tear as would lead to any curtailment of its useful life as a playable instrument.
I am puzzled by the Chief Judge’s aspersions on “some findings of fact” of Judge Laro, as adopted by the majority in Simon v. Commissioner, supra at 268 (Hamblen, C.J., dissenting); see also id. at 276-280. These aspersions are unnecessary to support the dissenters’ bottom-line interpretation of section 168 in these cases; even if they are well founded, 1 they do not require a different result in Simon under the “clearly erroneous” standard for review of the findings of fact of a trial judge. See Williams v. Commissioner, 1 F.3d 502, 505 (7th Cir. 1993), affg. T.C. Memo. 1992-269 . This is because they do not impair what I take to be Judge Laro’s finding of ultimate fact in Simon, as described in the first sentence of the immediately preceding paragraph.
The arguments for bifurcating the cost of dual-use property might well deserve respectful attention, but in some other case. In the current procedural posture and state of the record of these cases, there is no ground for considering bifurcation. Respondent went for all or nothing, totally disallowing cost recovery allowances under section 168 for tangible business property that can also be characterized as collectibles or works of art. Petitioners therefore cannot be faulted for failing to offer evidence to support allocation of their costs between the recoverable and nonrecoverable elements, nor should the majority opinions be criticized for not considering bifurcation. In any event, I would not adopt the bifurcation approach; to do so would reintroduce administrative problems that section 168 is intended to minimize.
In my view, the total testimony in Simon v. Commissioner, 103 T.C. 247 (1994), including that of respondent’s expert witness Wiley Grant, amply supports Judge Laro’s finding that the Tourte bows suffered substantial wear and tear. First, Mr. Simon testified that: (1) The vibration of the wood on the Tourte bows resulted in wear and tear on the bows, Tr. at 15-16; (2) Tourte bows in general “play out” (meaning they lose their usefulness as adjuncts to stringed musical instruments), Tr. at 22; (3) regular playing with any bow results in substantial wear and tear to the bow, Tr. at 34-35; and (4) the Tourte bows were not in the same pristine condition today as when petitioners had purchased them, due to use in their profession, Tr. at 60. Second, Yung Chin testified that: (1) The Tourte bows were not in the same condition at the time of trial as they had been on the date that he had appraised them, Tr. at 103, 113, 121; (2) “the stick is getting worn down somewhat on the stick itself, meaning there is wood that has come off of it”, Tr. at 104; (3) “the stiekfs of the Tourte bows are] being worn down somewhat, which you cannot repair”, Tr. at 121; (4) he noticed defects in both of the Tourte bows, Tr. at 121-122; and (5) “there is a slight amount of use shown on the handle of the bow”, Tr. at 123. Finally, Wiley Grant, respondent’s expert, conceded that playing the Tourte bows reduces their value to a professional musician. Tr. at 145-146.