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Thus, petitioners' experience indicates that the salvage value
for their rental units was negligible--proceeds from the sales of
rental units to third parties were for most rental units less
than 3 percent of their original acquisition cost. In such
circumstances, we conclude that petitioners were permitted to
ignore such salvage value in determining the depreciation
deduction for their property. Sec. 167(f) (before repeal in 1990
by the Omnibus Budget Reconciliation Act of 1990, Pub. L. 101-
508, sec. 11812(a)(1) and (2), 104 Stat. 1388, 1388-534); sec.
1.167(f)-1, Income Tax Regs. In Bailey v. Commissioner, 90 T.C.
558, 620 (1988), affd. in part, vacated in part and remanded 912
F.2d 44 (2d Cir. 1990), we stated, in discussing the application
of the income forecast method to the taxpayer's contractual
rights to films: "During the years in issue, the values of these
contract rights at the end of their anticipated useful lives were
so negligible that salvage values need not be taken into
account." Therefore, since petitioners' salvage values were
negligible, it was proper, under these circumstances, for
petitioners to depreciate the total cost of their rental units.
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,
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