Laws, Regulations & Annotations

Property Taxes Law Guide – Revision 2017

Revenue and Taxation Code

Property Taxation

Part 2. Assessment

CHAPTER 1. Taxation Base

Article 1. Taxable and Exempt Property

Section 212

212. Intangibles; money kept on hand. (a) Notes, debentures, shares of capital stock, solvent credits, bonds, deeds of trust, mortgages, and any interest in that property are exempt from taxation.

(b) Money kept on hand to be used in the ordinary and regular course of a trade, profession, or business is exempt from taxation.

(c) Intangible assets and rights are exempt from taxation and, except as otherwise provided in the following sentence, the value of intangible assets and rights shall not enhance or be reflected in the value of taxable property. Taxable property may be assessed and valued by assuming the presence of intangible assets or rights necessary to put the taxable property to beneficial or productive use.

History.—Stats. 1967, p. 3905, in effect August 31, 1967, added "solvent credits" to first paragraph, and all of last paragraph. Stats. 1995, Ch. 498, in effect January 1, 1996, added the subdivision letters (a) and (b); substituted "that" for "such" after "interest in" in subdivision (a); and added subdivision (c).

Federal reserve and national bank notes.—Federal reserve notes and national bank notes are not exempted by this section. Beery v. Los Angeles County, 116 Cal.App.2d 290.

Value—Assuming Presence of Intangibles.—Although assessors can assume the presence of intangible assets and rights necessary to put taxable property to beneficial or productive use, such intangibles cannot be taxed directly. Consequently, the California State Board of Equalization is required to remove the replacement cost for applied emission reduction credits that it added to the Board’s replacement cost value indicator for the assessment of a power plant. But no deduction is required from the Board’s income approach value indicator because there is no separate income stream attributable to the applied emission reduction credits. Elk Hills Power, LLC v. Board of Equalization (2013) 57 Cal.4th 593.

Exemptions—Intangible Assets and Rights.—Intangible property is exempt from taxation pursuant to Revenue and Taxation Code section 212, subdivision (c), which broadly exempts intangible assets and rights from taxation. An assessor's valuation of a hotel under the income approach failed to exclude certain intangible assets in violation of Revenue and Taxation Code section 110. SHC Half Moon Bay, LLC v. County of San Mateo (2014) 226 Cal.App.4th 471.