Court allows musician to deduct depreciation on antique viol.

Brian Liddle, a professional musician, bought a 17th-century viol made by Ruggeri (a contemporary of Stradivari) for use in his business of playing the viol professionally. The viol, for which he paid $28,000, was in excellent condition and Liddle expected to use it throughout the rest of his career.

Eventually, wear and tear took its toll and the viol's "voice" was no longer of a quality acceptable to Liddle.

Liddle took depreciation deductions for the instrument. The IRS disallowed them, arguing that the viol was a work of art that would only increase in value and therefore was not depreciable.

The case went to the Tax Court, which allowed the depreciation. The IRS appealed to the Third Circuit Court of Appeals.

Result: For Liddle. For depreciation to be allowed, Liddle had to show (1) that the instrument was "of a character subject to depreciation" (under IRC sections 168(c)(1) and 167) and (2) that the instrument actually suffered wear and tear. Both of these elements were fulfilled. Even though a Ruggeri viol is regarded as a work of art, in this case the taxpayer showed that the viol met the definition of depreciable property--property used in the trade or business--and that it actually had suffered wear and tear.

* Liddle (3rd Cir. 11995).