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section 1.168-5(e)(3), Proposed Income Tax Regs., supra, or even
with the Instructions that came with Form 4562. Consequently, we
hold that ABC did not make a valid election of the income
forecast method for its taxable year ending May 31, 1987.
2. Taxable Period Ending December 31, 1987
ABC did not comply literally with every one of the election
requirements for its short taxable period ending December 31,
1987. However, it did substantially comply with the election
requirements. ABC attached Statement 4 to its tax return for its
short taxable period ending December 31, 1987. Statement 4
substantially complied with the requirements of Revenue Procedure
87-57, supra, and section 5h.5, Temporary Tax Reform Act of 1986
Election Regs., supra. Although it failed to identify the
applicable Code section, Statement 4 recited 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.
In addition, Statement 4 identified 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."
Thus, ABC's return and attached statement indicated that an
election of the income forecast method was being made. See
Knight-Ridder Newspapers, Inc. v. United States, supra at 796.
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