BEFORE THE STATE TAX
COMMISSION OF UTAH
_____________________________________
XXXXX, :
aka XXXXX, )
:
Petitioner, )
:
v. ) INFORMAL DECISION
:
)
PROPERTY TAX DIVISION
OF THE : Appeal No. 86 0301
STATE TAX
COMMISSION OF UTAH, )
:
Respondent. )
_____________________________________
STATEMENT OF CASE
This
is an appeal to the Utah State Tax Commission from the XXXXX assessment of
telephone switching equipment owned by XXXXX (Petitioner). An Informal Hearing was held on XXXXX, in
the offices of the Utah State Tax Commission.
Roger O. Tew and G. Blaine Davis, Commissioners, heard the matter for
the Commission. XXXXX and XXXXX
represented the Petitioner. XXXXX
represented the Respondent.
Petitioner
asserted that the switch was only worth $$$$$ and that Respondent's assessment
of $$$$$ did not reflect fair market value.
Petitioner stated that on XXXXX, the only property was the switch. The company ceased operations on XXXXX, and
was sold. Petitioner sold the customer
base but not the equipment. Petitioner
estimated that the equipment had the salvage value of $$$$$ to $$$$$.
Respondent
asserted that the assessment of $$$$$ was correct and represented the net book
value. Respondent assessed the company
as an operating unit and not just as a piece of equipment, i.e., the switch was
valued as operating property of a going concern. Respondent did not use the income approach to value because of
the short income history. Petitioner
began operations in XXXXX.
Respondent
used the cost approach to value. On
XXXXX, Petitioner's records reflect a beginning net book value of $$$$$ and an
annual depreciation expense of $$$$$.
Dividing this expense by the book value reveals a depreciation rate of
15.24%, which represents a remaining depreciable life of 6.5 years. Respondent stated that the depreciation rate
takes obsolescence into account and that the telephone industry in general uses
depreciable lives of from six to twelve years.
FINDINGS
Respondent
properly used the cost approach to value to assess Petitioner's property.
Respondent
properly assessed the subject property as operating property of a going concern
and not just as a piece of equipment.
Petitioner
had the burden of proof to show that Respondent assessed the subject property
in error. Petitioner did not meet this
burden of proof at the hearing.
Petitioner was given an addition two weeks following the hearing in
which to furnish cost information to the Respondent with respect to supply
items which had been capitalized and subsequently included in the assessment.
Petitioner did not submit any additional information to Respondent.
DECISION AND ORDER
It
is the Decision and Order of the Utah State Tax Commission that Petitioner's
Petition for Redetermination of the value of the subject property for the tax
year XXXXX be denied.
The
XXXXX assessment of the subject property by the Property Tax Division of the
Utah State Tax Commission is hereby affirmed.
DATED
this 30 day of December, 1986.
BY ORDER OF THE STATE TAX COMMISSION OF UTAH.
R. H. Hansen Roger
O. Tew
Chairman Commissioner
Joe B.
Pacheco G.
Blaine Davis
Commissioner Commissioner