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of 1986 Election Regs., supra, was effective February 5, 1987,
and set forth the time and manner guidelines for elections made
after October 22, 1986. Moreover, section 5h.5, Temporary Tax
Reform Act of 1986 Election Regs., supra, was published in the
Federal Register for February 5, 1987, which was prior to August
21, 1987, the date ABC's tax return for its taxable year ending
May 31, 1987, was signed. Consequently, ABC should have complied
with the requirements set forth in section 5h.5, Temporary Tax
Reform Act of 1986 Election Regs., supra. ABC did not attach to
its return a separate statement or otherwise comply with the
requirements.
Nor did ABC comply with the requirements of section 1.168-
5(e)(3), Proposed Income Tax Regs., supra, assuming they were
applicable. ABC did not include on its return, or on any other
form or statement accompanying the return, the year the rental
property was placed in service, nor did it include the unadjusted
basis of the rental property.
As indicated above, section 1.168-5(e)(3), Proposed Income
Tax Regs., supra, states that Form 4562, Depreciation and
Amortization, is provided for making the election. The 1986
instructions for this form provide the following guidance for
line 7 of section C, Depreciation of Nonrecovery Property:
Line 7.--Report property that you elect, under
section 168(e)(2), to depreciate by the units-of-
production method or any other method not based
on a term of years. If you use the retirement-
replacement-betterment method, see section 168(f)(3).
On a separate sheet, attach: (1) a description
of the property and what depreciation method you
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