68 F.3d 41 (2d Cir. 1995), aff'g 103 T.C. 247 (1994)
Simon v. Commissioner is a leading federal income tax case at the intersection of depreciation and the listed property rules.
Are antique violin bows used by professional musicians depreciable under I.R.C. §§ 167 and 168 despite potential market appreciation, and do such bows constitute "listed property" under I.R.C. § 280F as property used for entertainment, recreation, or amusement?
Under I.R.C. § 167(a), a taxpayer may deduct a reasonable allowance for the exhaustion, wear and tear (including obsolescence) of property used in a trade or business or held for the production of income. Under I.R.C. § 168 (MACRS), applicable recovery periods and methods are used to compute depreciation, and salvage value is generally treated as zero. Depreciation turns on the asset's use and the fact of wear and tear, not its overall trends in market value. Under I.R.C. § 280F(d)(4), "listed property" includes certain categories (e.g., passenger automobiles, computers, etc.) and a catchall for "any other property used as a means of transportation, or of a type generally used for purposes of entertainment, recreation, or amusement." The listed property rules are aimed at items susceptible to personal or recreational use; ambiguous catchall language is construed in light of statutory context and purpose.
The bows were depreciable tangible personal property used in the taxpayers' trade or business notwithstanding any market appreciation; they were not "listed property" under § 280F because they are professional tools, not property of a type generally used for entertainment, recreation, or amusement.
Simon is frequently cited for two propositions: (1) appreciating assets can still be depreciable under MACRS because depreciation measures cost recovery for wear and tear, not changes in market price; and (2) the § 280F listed property rules are interpreted in light of statutory purpose to reach items prone to personal or recreational use, not the specialized tools of professionals. The case is a useful vehicle for mastering MACRS mechanics, salvage value's non-role, and interpretive canons that constrain broad catchall language. It also illustrates how courts balance textual breadth with legislative intent to prevent overinclusive applications that frustrate the tax code's design.