ABC Rentals of San Antonio, Inc., et al - Page 16

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          income expected over the life of the assets and did not make an             
          adjustment for salvage value.  ABC Rentals of San Antonio, Inc.             
          v. Commissioner, 142 F.3d at 1211.                                          
               We hold that Guaranteed failed to make a proper election for           
          its taxable year ending December 31, 1987, and that ABC failed to           
          make a proper election for its taxable year ending May 31, 1987.            
          We hold further that ABC made a proper election for its short               
          taxable period ending December 31, 1987, since it substantially             
          complied with the election requirements for this short taxable              
          period.  For rental units placed in service during taxable years            
          ending in 1988, the parties have stipulated that both Guaranteed            
          and ABC properly elected out of MACRS under section 168(f)(1).              
               Furthermore, in this particular case, since the parties                
          stipulated as to the estimate of income expected over the life of           
          the rental property and this estimate approximated petitioners'             
          experience, and since they stipulated that 1991-92 data did not             
          vary materially from the years in question, we hold that in this            
          situation petitioners did accurately forecast the income expected           
          over the life of the rental property.  In addition, since the               
          salvage value is inconsequential and since the parties stipulated           
          that 1991 and 1992 data did not vary materially from 1987 and               
          1988 data, we hold that petitioners did not have to make an                 
          adjustment to the rental units' costs for salvage value.                    







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