Client's Antique Tractor Collection

[jasdlm]

Client's husband collected Antique Tractors. He died in 2008. The tractors were appraised at the time of his death. Client had an auction and sold the tractors in 2010.

Client's prevous preparer had depreciated many of the tractors on H's schedule F (although they were by no means used in farming). I have matched those up as best I can and show those sales on 4797 recapping depreciation, etc.

My question is about the remaining tractors. The sales prices were substantially lower than the appraised prices. I'm not sure whether I should put this on Schedule D (realizing the loss) or just treat it as loss on personal items and leave the non-scheduled items off the return entirely (and the proceeds from the same). Total proceeds for non-depreciated tractors was approximately $50,000. Basis (according to the appraisal) is about $69,000.

Thanks much!

[jainen]

>> they were by no means used in farming<<

I have some historical items in my office, like an original 1913 Form 1040 and a 1970's Kleinrock guide. I don't actually use them in tax preparation as such, but I still consider them to be appropriately classified as business assets.

But my wife is not a tax preparer, so when I go her only interest in such collectibles will be in how much she can sell them for as an investment. In my state she gets a full basis step-up that eliminates any depreciation recapture.

[kcjenkins]

There is no depreciation recapture, and no need for a 4797, unless the wife was involved in the farming activities as a partner. In which case there might be recapture on her half, but not on the portion she inherited.

I'm going to assume [dangerous, I know] that HE was the farmer, not her. In which case, she got full step-up in basis, and she is now selling inherited investment property. If she has a written appraisal I'd take the loss. And not on individual items, I'd lump them together since they were inherited together and sold in one single auction.