Tax Research Problem

In 2022, Ria Patel was hired by the Philadelphia Orchestra as a professional concert cellist. Ms. Patel has been training as a cellist since a young age and is ecstatic about the opportunity. Playing for the Philadelphia Orchestra is truly a dream come true.

Her first three years at the Philadelphia Orchestra will be probationary, and she will operate as an independent contractor. That is to say, she will be self-employed and must provide her own instrument. She will be compensated per performance until the end of her probationary period when, assuming satisfactory performance, Ms. Patel will join the Philadelphia Orchestra as a full-time musician.

To improve her performance, Ria decided to purchase a 225-year-old antique cello. The antique cello cost $100,000. Her motivation for buying an antique cello was two-fold. First, cellos from this era are famous for delivering a more robust sound than a modern-day instruments. Second, an antique cello is considered a good investment that will continue to appreciate in value. She plans to use the newly acquired antique cello as her primary instrument for practice and concerts.

Considering her future tax filings, Ms. Patel has engaged your accounting firm to conduct tax research on her newly acquired asset. She wants to know if she can depreciate the cello as a business-use asset. Your manager, David Horn, has assigned the initial research to you. Mr. Horn would like you to draft a tax memorandum for Ms. Patel, documenting your analysis on whether the antique cello is depreciable.