I have a question about rolling-over capital gains on my profits from a sale of a musical instrument that is used for self-employed business.
I am self-employed cellist (Schedule C) with a profession code (Box B of Schedule C): 711100 , and I bought a cello for $85,000 in 2003. The instrument is my primary used cello for all work and it depreciated (via form 4562) over 7 years (as per IRS code for musical instruments). Now, I have an opportunity of selling this same instrument for $200,000, meaning I will have $115,000 in capital gains. If the sale does happen, I plan to upgrade and buy another cello for $350,000 and again, use it for my work. My questions are:
1) Since I am buying a more expensive instrument, will I be able to roll-forward the capital gains, as I will actually have to add another $150,000 to buy the replacement cello?2) If the roll-forward of capital gains is allowed, in what time period must I have the new purchase completed (from the date of sale) in order to qualify? Is it 90 days, 6 months, 1 year?
3) Am I able to again depreciate the new cello for the full $350,000 amount or would it be only for the $150,000 I added on in order to upgrade?All your feedback is very much appreciated.