- 28 -
income and is to be retired from service by the
taxpayer. * * *
In Carland, Inc. v. Commissioner, 90 T.C. 505, 547 (1988), affd.
in part, revd. in part and remanded 909 F.2d 1101 (8th Cir.
1990), we stated: "An important factor in the determination of
salvage value is the taxpayer's experience and the particular
circumstances of that experience. Industry experience is also a
factor which may be given consideration." In this case,
petitioners' experience indicates that the vast majority of
rental units ceased to be in their inventory due to customers'
retaining the rental units for the full term of the rental
contract (be it the initial rental contract or the subsequent
rental contract). If a customer retained the rental unit for the
full term of the rental contract, title to the rental unit vested
in the customer at no additional cost, provided the customer had
paid all periodic rental payments.
In the Carland case, we determined the salvage value of the
taxpayer's property based on a percentage of salvage proceeds to
original acquisition costs. Id. at 547.
In this case, each Entity's 1991 and 1992 experience data
indicates that its percentage of sales proceeds derived from
sales of rental units to third parties by category, such
percentage being equal to the ratio such total sales proceeds
bore to the total initial purchase price of all rental units in
that category, was as follows:
Page: Previous 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 NextLast modified: May 25, 2011