- 10 -
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.
ABC did not attach a separate statement to its return for
its taxable year ending May 31, 1987. ABC did not include the
year the rental property was placed in service, nor did it
include the unadjusted basis of the rental property.
7See infra pp. 18-19.
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