86-0301 - Centrally Assessed



XXXXX,                                                                                 :

aka XXXXX,                                                                           )


            Petitioner,                                                         )


v.                                                                                 )           INFORMAL DECISION



PROPERTY TAX DIVISION OF THE                       :           Appeal No. 86 0301

STATE TAX COMMISSION OF UTAH,                  )


            Respondent.                                                     )



            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.


            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.


            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.


R. H. Hansen                                                                Roger O. Tew

Chairman                                                                      Commissioner

Joe B. Pacheco                                                            G. Blaine Davis

Commissioner                                                               Commissioner