Failure to properly elect out of MACRS.

• Jurisdiction: United States
• Author: Kautter, David J.
• Date: 01 January 2002

In New Gaming Systems Inc. (NGS), TC Memo 2001-277, the Tax Court held that a corporation failed to properly opt out of depreciating its rental game equipment under the modified accelerated cost recovery system (MACRS).

NGS rents electronic gaming equipment. On its 1994 return, it reported depreciation on the lines for "GDS and ADS deductions for assets placed in service in tax years beginning before 1993." NGS did not report any depreciation on the line "Property subject to section 168(f)(1) election." On its 1995 and 1996 returns, NGS again reported depreciation on the GDS and ADS lines, with nothing reported on the Sec. 168(f)(1) election line. However, NGS did attach to the returns a description...