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any other method of depreciation. Rather, the Statement 2
"Method" column was left blank. Nor did it refer to section
168(f)(1) or to any other provision of the Code. Statement 2 did
not provide the year the rental property was placed in service--
in the "Date Acquired" column, Statement 2 says "VAR". In
addition, Statement 2 did not provide the unadjusted basis of the
rental property--the "Cost or Basis" column is blank.
The Form 4562 filed with Guaranteed's tax return for its
taxable year ending December 31, 1987, contains the heading on
line 9 "Property subject to section 168(f)(1) election." The
1987 instructions for this form provide that line 9 should be
used to report property that the taxpayer elects, under section
168(f)(1), to depreciate by any method not based on a term of
years. Furthermore, the instructions provide that the
depreciation deduction for the property should be entered in
column (f) of line 9.7 However, Guaranteed left column (f) of
line 9 blank. Rather, it appears the depreciation deduction for
the rental property has been included in column (f) of line 10--
"Other depreciation" where a $40,616 deduction is claimed.
Guaranteed failed to indicate on its Form 4562 that it was using
the income forecast method of depreciation. Nothing in
Guaranteed's return indicates that it was electing the income
forecast method of depreciation.
7See infra pp. 18-19.
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