ABC Rentals of San Antonio, Inc., et al - Page 33

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          under these circumstances, did not have to make an adjustment to            
          the rental units' costs for salvage value.                                  
          III. Conclusion                                                             
               We hold that Guaranteed failed to make a proper election of            
          the income forecast method 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 was borne out by                     
          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                 








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