My friend is an ex violinist for London Symphony.
He is married to a US citizen, living in Syracuse, NY but is not a citizen himself by choice. He purchased a violin in the UK 30 yrs.ago and used it for his work, for $10K (US $ equivalent) and sold it in the US recently to a collector for $35K. He asked me how this might be taxed?
Is this a capital gain or collectible or taxable at all in US? tks all
bill
Was this used in his job? Did he depreciate it or should he have been depreciating it? In any case he has a gain upon sale and it would sure be taxable. If this is business equipment, it is reported on a 4797 and ends up ordinary income. If personal use property, long term gain, not a collectible unless the Secretary has determined that musical instruments are collectibles.
-- ArtKamlet at a o l dot c o m Columbus OH K2PZH
tks Art, was used in his profession while in UK but not here. Not sure if it was depreciated but will find out. Thge violin was sold to a collector here. more later.
bw
I haven't researched this issue, but it's possible the "allowed or allowable" language in the code could make whether or not he actually took depreciation in the UK irrelevant to determining the amount of his gain. Stu
What if it wasn't depreciable in the UK, even though it would have been in the US? Seth
Which country(s) tax laws was he subject to for the years in question? If the property was used in a business conducted overseas and he was not subject to U.S. tax law at the time, then I'm guessing neither the income nor expenses (including depreciation) from that business are relevant to the tax return in question.
-Mark Bole
How would he calculate his basis?
(There have been loopholes involving depreciation-law differences. At one time, UK depreciation belonged to the nominal owner; US depreciation belonged to the beneficial owner. So if a UK company bought an airplane and leased it to a US company, with the lessor having the right to buy it for $1 after 10 years, they could both take the depreciation.) Seth
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