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Article: Tax Court holds income forecast method not proper for rent-to-own company. (ABC Rentals of San Antonio, Inc.)(Brief Article)
- Article from:
- The Tax Adviser
- Article date:
- April 1, 1995
- Author:
CopyrightCOPYRIGHT 1995 American Institute of CPA's. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan. All inquiries regarding rights should be directed to the Gale Group. (Hide copyright information)
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Companies using the income forecast depreciation method should be aware of a recent Tax Court case that holds that this method was improper for consumer durables. In ABC Rentals of San Antonio, Inc., TC Memo 1994-601, the court held that the companies failed to demonstrate that the consumer durables leased in their rent-to-own business were properly depreciated under the income forecast method.
The consumer durables in the case were appliances, furniture, televisions, stereos and video cassette recorders, which were leased to individuals under rent-to-own leases. The court noted that the underlying theory of the income forecast method is that the useful life of ...