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Keep your guitar for a little while and it becomes long-term capital gain of $1 :)

• analog31 5y ago
  When I bought a new instrument a decade ago, I did some reading on the tax implications. I was ready to splurge on something nice. There was a fascinating case of a musician who bought a super expensive 200 year old instrument. He amortized the expense over some period like 7 years. Then he was invited to come on down to the tax court for a friendly chat. Turns out, the tax court didn't smile on depreciating an appreciating asset that demonstrably lasts 200 years. I actually considered buying an instrument in salvage condition and paying to have it restored, since restoration is an expense. But in the final analysis, I was more interested in playing than screwing around for a few dollars in tax savings.
  • cdjk 5y ago
    Why? This is a serious question. Seven years is the correct time period for musical instrument depreciation. And if I recall, any property than can be depreciated must be, and if not will be treated as if it had on sale. Besides, if it’s ever sold there is recaptured depreciation which counts as income.
    • analog31 5y ago
      That's a perfectly fair point, and the answer is, I don't know. It's quite possible that I misunderstood the report.