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Tractors, Antiques or Not, Are Deductible

By: Ernie Neve

Steven Hoakison took his case to court, where the IRS asserted that


  • Hoakison was a collector of antique tractors, and

  • the 40 farm tractors in dispute due to the IRS audit were purchased by Hoakison primarily for personal reasons and served no business purpose.


To push its no-business-purpose position, the IRS noted that 37 of the 40 tractors in dispute were more than 40 years old at the time Hoakison purchased them and that there “is obviously an element of nostalgia” involved because the tractors were similar to those he used while growing up. (Some of the tractors were over 75 years old.)


The IRS further asserted that Hoakison could not actually have needed the number of tractors reported for the years at issue because the work performed by each of the newly acquired 29 tractors could also have been performed by the existing 17 tractors.


(Yes, this totals 46 tractors. We are focusing on the 40 that the IRS wants to disallow.)


How the Court Ruled


The court noted that


  • although Hoakison could have performed the same work with the 17 original tractors, that fact is not relevant to the deductibility of the newly acquired tractors; and

  • the only requirement for the newly-acquired-older tractors (the 40 tractors in dispute with the IRS) is that they be used in Hoakison’s farm business—which they were.


Thus, the court ruled for Hoakison.


The IRS brought up the antique issue. The court allowed the tractor deductions based on use in the business and in its ruling cited both the Simon and Liddle antique music instrument cases.


Key point. The Hoakison case involved an Iowa farmer outside the Second and Third Circuit Courts of Appeal, where precedent from the Simon and Liddle cases did not have to be followed. But the court did follow both the Simon and Liddle cases and cited them as authority.


Most everyone operates their business differently. The key to business assets and their deductions is how you use the assets.


If you are considering antiques for use in your business as business assets and would like to discuss them, please call me on my direct line at 610-278-8400.