Your best clients, the doctors of the Beautiful You Cosmetic Surgery Clinic, rake in so much money that they’re able to invest in museum-quality artworks that they display in their offices in order to show their patients how “cultured” they are. But now Dr. Smart, the Clinic’s managing partner, is sitting across the desk from you and extremely unhappy because you’ve just told her that the doctors cannot take MACRS depreciation deductions for the $$$ (millions) that they’ve invested in their Picassos, etc… (a) The doctor is absolutely right to be upset. Liddle v. Commissioner*** stands as conclusive precedent that the cost of “works of art” is always depreciable. *** Brian Liddle, now with the Minnesota Orchestra. (b) The doctor won’t be so upset after you explain that you only meant that they should amortize (instead of depreciate) the cost of their artworks.
Your best clients, the doctors of the Beautiful You Cosmetic Surgery Clinic, rake in so much money that they’re able to invest in museum-quality artworks that they display in their offices in order to show their patients how “cultured” they are. But now Dr. Smart, the Clinic’s managing partner, is sitting across the desk from you and extremely unhappy because you’ve just told her that the doctors cannot take MACRS depreciation deductions for the $$$ (millions) that they’ve invested in their Picassos, etc…
(a) The doctor is absolutely right to be upset. Liddle v. Commissioner*** stands as conclusive precedent that the cost of “works of art” is always depreciable.
*** Brian Liddle, now with the Minnesota Orchestra.
(b) The doctor won’t be so upset after you explain that you only meant that they should amortize (instead of
(c) The doctor won’t be so upset after you explain that you only meant that they couldn’t take both MACRS and the § 179 expensing deduction for the same dol-lars of acquisition cost.
(d) Only the doctors’ post-1986 costs are depreciable, not their pre-1987 costs.
(e) The doctor(s) will just have to get over it – the cost of fine art generally is not depreciable; Liddle was a rare exception, a very unique case.
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