ABC Rentals of San Antonio, Inc., et al - Page 12

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          Nothing in ABC's return indicates it was electing the income                
          forecast method of depreciation.                                            
               ABC attached Statement 4 to its tax return for its short               
          taxable period ending December 31, 1987.  Statement 4 provided              
          that the type of property being depreciated was "RENTAL                     
          INVENTORY" and that a method of depreciation--"INCOME                       
          FORECASTING"--was used other than ACRS or MACRS.  The statement             
          did not refer to section 168(f)(1) or any other Code section.               
          Statement 4 provided the year the rental property was placed in             
          service--"6/30/87", as well as the unadjusted or cost basis of              
          the rental property--"624,899".                                             
               For rental units placed in service by Guaranteed and ABC in            
          1988, respondent does not contest the form or timing of the                 
          election.  The parties have stipulated that the Entities have               
          filed elections pursuant to section 168(f)(1) to select the                 
          income forecast method of depreciation for the tax years ending             
          December 31, 1988.  Statement 10 attached to Guaranteed's 1988              
          income tax return contained the following:                                  
               SECTION 168(F)(1)   ELECTION TO EXCLUDE PROPERTY FROM ACRS             
               BY USE OF A METHOD OF DEPRECIATION NOT EXPRESSED IN A TERM             
               OF YEARS: RENTAL INVENTORY                                             
                    1.   NAME OF TAXPAYER:   GUARANTEED RENTAL SYSTEM, INC.           
                    2.   TAXPAYER I.D. # :  74-2390641                                
                    3.   YEAR RECOVERY PROPERTY PLACED IN SERVICE:  VARIOUS           
                    4.   UNADJUSTED BASIS OF RECOVERY PROPERTY:  $210,138             
                    5.   METHOD OF DEPRECIATION:  INCOME FORECASTING                  








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