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SUPPLEMENTAL MEMORANDUM FINDINGS OF FACT AND OPINION
HAMBLEN, Judge: This case is before us on remand from the
Court of Appeals for the Tenth Circuit. ABC Rentals of San
Antonio, Inc. v. Commissioner, 142 F.3d 1200 (10th Cir. 1998),
revg. and remanding T.C. Memo. 1994-601.
The issues for decision concern the proper election and
proper application of the income forecast method of depreciation.
We previously determined in ABC Rentals of San Antonio, Inc. v.
Commissioner, T.C. Memo. 1994-601 (ABC Rentals I), that
petitioners failed to demonstrate that the consumer durables,
leased in their rent-to-own business, constitute property which
is properly depreciable under the income forecast method of
depreciation. The Court of Appeals concluded that section
168(f)(1)2 does not preclude use of the income forecast method
for property like petitioners' rent-to-own inventory. Since we
determined that petitioners' rental units could not be
depreciated using the income forecast method and did not reach
respondent's other arguments, the Court of Appeals has directed
us to determine on remand
whether taxpayers made a proper election under
section 168(f) and, if so, whether they improperly
applied the income forecast method because they did not
accurately forecast the income expected over the life
2All section references are to the Internal Revenue Code in
effect for the years at issue, and all Rule references are to the
Tax Court Rules of Practice and Procedure.
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