Musical instruments do depreciate and you can claim a depreciation deduction on your musical instrument – with a few notable exceptions. Almost any new instrument that you have been using in your business is deductible. They include brand-new guitars, violins, etc.
There are three methods using which you can depreciate musical instruments. They include the Modified Accelerated Cost Recovery System (MACRS), Convention, and Section 179 Deduction. Let’s take a brief look at all these methods to understand them better.
How to depreciate musical instruments?
There are three methods using which you can depreciate musical instruments. They include the Modified Accelerated Cost Recovery System (MACRS), Convention, and Section 179 Deduction. Let’s take a brief look at all these methods to understand them better.
1. MACRS
The Modified Accelerated Cost Recovery System (MACRS) is the method currently used to depreciate musical instruments, as well as other properties. Its name makes it clear that MACRS deducts more of an asset’s value in its early years of use than in its later years. Here’s why that’s important:
Assume for a moment that you’ve owned an orchestra band for a decade. MACRS’ algorithm, when calculating the depreciated amount, will give more weightage to the band’s early years of use. The last few years may not have had much impact on the deductible amount.
MACRS uses two systems to depreciate assets:
- General Depreciation System
This method depreciates personal property on the basis of the declining balance method. It calculates larger deductible amounts in the asset’s earlier years and smaller deductible amounts in its later years. Experts tell us that this technique is mostly used to depreciate gadgets that rapidly go out of date. Examples include computers and cell phones. So it may not be beneficial for owners of antique musical instruments.
- Alternative Depreciation System
The Alternative Depreciation System method relies on a straight-line method to calculate depreciation. When compared with GDS, it calculates the deductible amount over a longer period. You can choose whether to use ADS or GDS to calculate your musical instruments’ depreciation using IRS Form 4562 – Depreciation and Amortization. It helps you select the system based on your asset class basis.
2. Convention
If you have decided not to choose the foregoing method to calculate the depreciation of your musical instrument, you can select a convention class. A convention is basically a method using which accountants determine which portion of the year they should select to depreciate property.
Accountants have to select two years for applying the convention method: the year in which you purchased the musical instrument and the year in which you removed it from service. Apart from doing that, accounts must choose whether to select a half-year or mid-quarter convention.
Here’s what both these terms mean:
- Half-year convention
This convention works on the assumption that the musical instrument was purchased (or removed from service) in the middle of the year. It, therefore, allows only six months of depreciation deduction for the 1st and last years. Provided your accountant decides to use this convention, it would mean that at least eight years should pass for your instrument’s value to fully depreciate with a seven years life by MARCS.
- Mid-quarter convention
The mid-quarter convention works on the same principle as that of its half-year counterpart. But there’s one key difference as this convention assumes that you placed (or removed) your instrument from service at ½ of the calendar quarter. There’s one more thing you may need to know about the mid-quarter convention. It can only be used if, for all the assets (musical instruments) you purchased in a year, 40% were purchased in the final three months.
3. Section 179 Deduction
Section 179 allows US taxpayers to deduct as much as $105,000 from the cost of the musical instrument from the year you placed it in service. It’s another method that you can use to calculate the depreciation deduction of your musical instrument.
However, there are a few not-so-minor caveats you’ve to deal with if you’re going to claim a Section 179 deduction. It requires that the amount you’re claiming on the deduction isn’t greater than your aggregate taxable income. It also requires that you recover any depreciation whenever you sell the asset.
Let’s explain the final condition with an example. Assume for a moment that you purchased a guitar for $1000 and claimed an equal amount on its depreciation. If you went on to sell the same guitar for, say, $400, then you’ll have to pay tax on the entire $400 in the year you sold the guitar.
What is meant by depreciation?
Depreciation of an asset (like a musical instrument) points to the reduction in its value, either due to expiry over time or due to the use of the asset. Other factors that are responsible for depreciation include wear and tear, perishability, efflux of time, and expiry of usage rights, etc.
How to calculate the depreciated amount?
You need three factors to calculate the depreciated amount of any asset: useful/shelf life of the asset, salvage value of the asset, and cost of the asset. Here’s what each of these terms means and how, based on their numbers, you can calculate the depreciated amount:
- The useful life of the asset
Let’s assume you want to calculate the depreciation of your guitar. How much time does its manufacturer tell you the guitar would last? That time is its useful life. Note it down. - Salvage value of the asset
Imagine for a moment that your guitar cost you $400 four years ago. Its current price won’t be anywhere near that. You’ll probably need an accountant to get the salvage value. - Cost of the asset
Once you have the useful life of the asset and its salvage value, subtract the latter from the former. Divide the final amount by the asset’s cost (which includes money you spent on its purchase, transportation, and set-up).
Pro Tip: If you want to calculate the depreciation of your musical instrument for tax-related purposes, hire an accountant.
Related Readings:
Guitars – History, Invention And Interesting Facts
Drums & Percussions – History and Fascinating Facts
Conclusion
The majority of musical instruments depreciate in value over time. As an owner of one, you might want to claim depreciation on your instrument using any of the methods given above.
You also face the decision of whether or not to take Section 179 deduction (which will provide you with the ability to recoup a large portion of your instrument’s cost in the year of its purchase).
All these decisions won’t only affect the money in your wallet but they will also have a sizable impact on your tax returns. That’s why we recommend that whenever you purchase an instrument or claim depreciation, you should keep all records for the next three years.
Readings that you may like:
DAW Related:
Best DAWs For Musicians Available (With FREE DAWs)
What’s The Most CPU Efficient DAW? – 5 DAWs Compared
How To Make Music Without Using A DAW?
Pro Tools Guide: How To Use AutoTune & Pitch Correction?
Ableton Review: Is It Worth The Money? (Cons & Pros)
Logic Pro X Review: Is It Worth It? (Cons & Pros)
How To Use Auto-tune & Pitch Correction In Cubase?
How To Fix Ableton Crackling, Crashing & Freezing? Step By Step
Plugin Related:
What Are Audio Plugins? Different Types of Plugins Explained
What Are The Best Tools To Develop VST Plugins & How Are They Made?
Cost of Developing Audio VST Plugin: Several Factors (With Table)
VST, VST, AU and AAX – What’s The Difference? Plugin Formats Explained
Complete Guide To Noise Gate – What It Is, What It Does & How To Use It?
How To Clip My Drums? Here Is How & Audio Teasers (Before/After)
Complete Guide To Limiter: How To Use It (+ Best Plugins & Analog Limiters)
Mixing With Reverb: How To Add Life To Your Mixes
Linear Phase vs Minimum Phase EQ – Full Guide
Difference Between LUFS, RMS & True Peak Loudness Meters
How And When To Use Algorithmic And Convolution Reverb In Your Mix?
Difference Between Active EQ, Passive EQ and Dynamic EQ
Headphones & Studio Monitors:
Do headphones get worse with age?
Monitors vs Studio Headphones For Mixing & Mastering
Top 10 Room Calibration & Headphones/Speakers Correction Plugins
Are Noise-Canceling Headphones Good For Music Production?
Can Headphones Break in Cold Weather?
Why do headphones & cables get sticky?
Can Wearing Headphones Cause Hair Loss?
How Do I know If My Studio Monitor Is Blown?
Side Effects Of Sleeping With Your Headphones On
Do You Need Music Amplifier For Studio Monitors or Studio Headphones?
Do Headphones or Earphones Damage Your Brain?
Can Headphones or Earphones cause Deafness or Toothache?
FarField, MidField & NearField Monitors – Their Uses, Pros & Cons
MIDI & Synths:
Should I Buy A MIDI Keyboard Or Synth? (Are Synths Worth It Anymore?)
Why Is Audio Gear So Expensive? (Especially Synths)
Top 12 Synth Brands – Analog, Digital & Modular Synth Manufacturers
11 Tips How To Choose MIDI Keyboard
Should I Buy MIDI Controller Or Keyboard? Cons, Pros & Tips
Guitar/Amp Focused:
Can I Put Nylon Strings on a Steel-string Guitar?
Do Electric Guitars Sound Good Unplugged?
Buying Your First Guitar: 2 Things To Know
Are Tube Amps Worth It? (Tube vs Solid-State Amps)
How Often Does A Guitar Need a Setup?
Can I Play Classical Guitar On A Steel-String Guitar?
How often guitar necks need reset?
Can You Play Two Guitars Through One Amp?
Can a 6 String Bass Be Tuned Like A Guitar?
Can I leave My Guitar Tuned Down a Step? Yes, But Is It Safe?
Should I Learn 4, 5 Or 6 String Bass Guitar & Why?
How To Know If your Guitar Amp Is Broken?
How To Fix Distorted Bass Guitar Sound?
Do Fender Guitars Appreciate In Value?
Should You Put Stickers On A Bass Guitar?
How Acoustic And Electric Guitars Are Made?
Is Electric Guitar Too Loud for an Apartment?
Does a Preamp Improve Sound Quality?
If I Learn Acoustic Guitar Can I Play Electric Guitar?
How Many Hours A Day Should You Practice Bass Guitar?
Do I need an AMP/DAC To Run Bookshelf Speakers?
How to Record Electric Guitar Into Logic Pro X?
Do headphones get worse with age?
Recommended Gear:
Top 12 NearField Studio Monitors On Any Budget
Top 10 Midfield Studio Monitors For Home Recording
Best Biggest Studio Monitors (FarField Monitors)
Top 10 Guitar Pickups for Low Tunings
Top 10 Analog Compressors For Mixing & Mastering (On Any Budget)
Top 12 USB Audio Interfaces Under 150$, 200$, 300$ 400$ (Any Budget)
Top 12 Hardware Equalizers (Analog EQs For Mixing & Mastering)
Top 6 Analog Hardware Limiters
Top 6 Solid State Bass Amps (On Any Budget)
Top 6 Ribbon Mics On Any Budget (For Vocals, Drums & Guitars)
Top 6 Cheap Dynamic Mics For Vocals Under 50$, 100$, 200$ & 300$
Top 6 Chorus Guitar Pedals (On Any Budget)
6 Best 61-Key MIDI Keyboards (On Any Budget)
9 Best 49-Key MIDI Keyboards Under 100$ & 200$
Top 5 Best 25 Key MIDI Keyboards (On Any Budget)
Top 12 Acoustic Drums (Best Kits/Sets On Any Budget)
Plugin Roundups:
Genre Focused:
Top 10 EDM Plugins (And 10 Best FREE Plugins For EDM)
Top 10 Plugins For TRAP Beats (And 5 Best FREE Trap Plugins)
20 Best Plugins For Rock Musicians (+ 6 FREE Plugins)
Top 14 Trance Plugins (Uplifting, Tech, Progressive, Vocal, Dream, Hard)
Top 10 GOA & PsyTrance Plugins (Best Psychedelic Trance Tools)
Top 7 Plugins For Dubstep (With 10 Best FREE Effects & Synths)
Top 20 Synthwave Plugins (+ 11 Best FREE Plugins)
Top 15 Plugins For Techno, House, Electro, Tech House, UK Garage
Top 6 Plugins For Latin Music (And 4 FREE Tools)
Top 12 Plugins For Hip-Hop (+ Best Kontakt Libraries)
Top 7 Plugins For Game & Film Scoring (+ 6 Best Kontakt Libraries)
Top 10 R&B And Pop Music Plugins & KONTAKT Libraries
30 Best Free Plugins For DnB, EDM, IDM & Experimental Music
EQ Plugins
Top 12 Free EQ Plugins For Precise Mixing & Mastering
Top 9 Mid/Side EQ Plugins For Mixing & Mastering (+ 2 Free Tools)
Top 7 Graphic EQ Plugins (With 3 Best Free EQs)
Top 7 EQ Plugins For Mastering In | And Best FREE Mastering EQs
Top 6 Passive EQ Plugins (Klevgrand, SPL, UAD, Waves, IK Multimedia)
Top 11 Plugins For Making Metal (Best Guitars, Drums & Effects)
Metering:
Top 5 Audio Metering Plugins (LUFS, RMS, LRA, True Peak)
Top 6 Spectrum Analyzer Plugins – Spectral Analysis Tools
Top 6 Oscilloscope Plugins To See The Waveforms
Top 5 Key Detection Plugins & Software (+ Best FREE App)
Kontakt Libraries
20 Best Kontakt Libraries For All Categories (Synths, Drums, Vocals)
Top 7 Drum Libraries For KONTAKT (And 4 Freebies)
Top 7 Trap Music Kontakt Libraries (And Best Lo-Fi Kontakt Library)
Top 7 Metal & Rock Kontakt Libraries (Best Guitars & Drums)
Top 10 Guitar Libraries For Kontakt (Acoustic, Electric, Bass & Freebies)
Top 7 Trailer Scoring Plugins & Kontakt Libraries
20 Best Free KONTAKT Libraries For Various Instruments
Top 9 Piano Kontakt Sample Libraries (And 5 Best Free Pianos)
Top 10 Percussion KONTAKT Libraries (And 3 Freebies)
Top 7 Kontakt Libraries For Horror & Thriller Scoring (No VSTs)
Audio Restoration, Calibration & Utility:
Top 6 Noise Reduction Plugins (And 3 Best Free Tools)
6 Best Audio Restoration Plugins & Software
Top 7 Phase Alignment Plugins To Fix Your Bass & Drums
Top 10 Room Calibration & Headphones/Speakers Correction Plugins
Instrument Plugins:
Top 6 Vocoder Plugins (Effects & Synths + FREE Vocoder)
11 Best Rhodes VST Plugins (AND 5 Free Rhodes Plugins)
Top 12 Randomizer Plugins Including FREE Plugins
Top 6 Kick Drum Plugins (Best Kick Designer Tools)
Top 12 Woodwind Plugins (And KONTAKT Libraries)
Top 10 Double Bass Plugins (Best Upright Basses)
Top 5 Strings VST Plugins (AND 4 Best Free Instruments)
Top 6 Sampler Plugins (And 3 Best FREE Plugins)
Top 6 Classical Guitar Plugins & Kontakt Libraries (And FREE Guitars)
Top 12 Sub Plugins (Best 808 & Bass Tools For Massive Low End)
Top 10 Plugins On PluginBoutique (And 7 Best Free Plugins)
Top 11 Plugins On Plugin Alliance
Top 7 Acoustic Guitar Plugins (And 4 Best Kontakt Libraries)
9 Best Bass Guitar Plugins (And 2 Best Freebies)
Top 6 Electric Guitar Plugins (Best PAID & FREE Picks)
Top 10 Arpeggiator VST Plugins (Best Synths, MIDI Effects & Tools)
Top 10 Modular Synth Plugins (And 3 Best FREE Plugins)
Top 6 Choir Plugins & Sample Libraries (And 3 Best Free Plugins)
11 Best Percussion & Drum VST Plugins (And FREE Plugins)
Top 8 Piano Plugins (Best Sounding Pianos & 5 FREE Piano Plugins)
Top 6 Organ Plugins Ever Made (And 3 Best Free Organs)
Top 14 VST Plugins For Beginners (And 9 FREE Plugins)
Top 9 Drum Machine Plugins (And Groovebox Plugins)
4 Best Banjo Plugins (Best Banjo Instruments)
The 5 Best Ukulele Plugins & Kontakt Libraries
Top 13 Synth Plugins (And 5 Best FREE Synths Plugins)
Top 13 Sequencer Plugins (Synth, MIDI & Step Sequencers)
The 10 Best Multi-Effect Plugins (And 3 Best Free Plugins)
Top 12 Plugin Bundles For Musicians (Synths, Mixing & Mastering)
Processing & Sound Design:
8 Best Lo-Fi Plugins (PAID & FREE)
Top 11 Plugins For Mixing Vocals (For Home Studio)
Top 12 Saturation Plugins (Best Mixing & Mastering Tools)
Top 6 Pitch Shifter Plugins (And 3 Best FREE Pitch Shifters)
Top 6 Chorus VST Plugins For Musicians (And 3 FREE Plugins)
Top 6 Limiter Plugins For Precise Mastering & Mixing
The 8 Best Filter Plugins For Precise Cuts & Boosts (+ 5 Free Filters)
6 Best Autotune Plugins To Improve & Enhance Your Vocals
Top 10 Transient Shaper Plugins (VST, AU, AAX)
Top 7 Enhancer Plugins (For Bass, Drums, Vocals & Harmonics)
Top 6 Flanger Plugins (And 5 Best FREE Flanger Emulators)
Top 7 Phaser Plugins (And 3 Best FREE Phasers)
Top 10 Plugins For Mixing Drums (And 3 Best Free Plugins)
Top 7 Bitcrusher Plugins (And 4 Best FREE Bitcrushers + 3 Bonuses)
Top 6 Plugins For Voice-Over & Dialogue Cleaning (Post Production)
Top 10 Stereo Imaging Plugins (Best Old & Modern Picks)
Top 5 Multiband Limiter Plugins
Top 7 De-Esser Plugins For Better Vocals (And 4 FREE Plugins)
Top 7 Clipper Plugins (Best Limiter Alternatives)
Top 6 Chord Generator Plugins That Inspire Melodies (+ FREE Tools)
7 Best Exciter Plugins For Mixing & Mastering
Top 7 Channel Strip Plugins (And 2 Best Free Plugins)
Top 11 Distortion Plugins (And 4 Top Free Plugins)
Top 5 Comb Filter & Resonator Plugins | Melda, Kilohearts, Tritik
The 7 Best Vibrato VST Plugins | Audec, Audiority, Melda
The 7 Best Tremolo Plugins | Eventide, Melda, SoundToys, Kuassa…
The 7 Best Harmonizer Plugins | Eventide, Melda, Aegean Music
7 Best Sidechain Plugins (VST, AU, AAX) | Xfer, Cableguys..
Top 10 Noise Gate Plugins (And 6 FREE Free Gate Tools)
The 6 Best Ring Modulator VST Plugins | KiloHearts, Melda
7 Best Autopan VST Plugins | CableGuys, Melda, Waves, Soundtoys
The 6 Best Frequency Shifter VST Plugins
Top 11 Granulizer Plugins For Future Sound Design
29 Best Sound Design VST Plugins
Compressor Plugins
Top 11 Free Compressor Plugins (VCA, Vari-Mu, FET, Digital)
Top 7 Multiband Compressor Plugins (And 4 FREE Plugins)
Top 5 Diode-Bridge Compressor Plugins
Top 6 Mastering Chain Plugins: Complete VST Solutions
The 7 Best VCA Compressor Plugins (VST, AU, AAX)
Top 11 Mastering Compressor Plugins (And 2 FREE Plugins)
Top 10 Opto Compressor Plugins For Transparent Sound
The 7 Best Vari-Mu Compressor Plugins (And 2 Best FREE Tools)
Reverb & Delay Plugins:
Top 12 Reverb Plugins (And 5 FREE Reverb Plugins)
The 6 Best Spring Reverb VST Plugins | AudioThing, GSi, u-he, Eventide
Top 12 Delay Plugins For Music Production In (VST, AU, AAX)
Top 10 FREE Delay Plugins (VST, AU, AAX)
The 10 Best Convolution Reverb Plugins
Amps & Preamps:
Top 10 Guitar Amp Plugins (And 5 Best FREE Simulators)
Top 10 Bass Amp Plugins (And 5 Best Free Simulators)
Top 9 Preamp Plugins (For Vocals, Guitars & More!) + Free Preamps

Started as a rapper and songwriter back in 2015 then quickly and gradually developed his skills to become a beatmaker, music producer, sound designer and an audio engineer.