Originally Posted by EGBigelo

What about depreciation? If anything it's been a deduction on his taxes every year. The bike's value as far as the shop goes has to be pretty low by now, right?

Originally Posted by RoadGuy

If the shop owner chose market value to value his inventory, he could have been depreciating the value of the bike over time in his inventory. When he sells the bike, he will have to show/report the amount he got (above the depreciated book value) for the bike as "recaptured", and pay tax based on the inventory gain.