Approved 2001 Minutes - Wednesday, January 3, 2001

Wednesday, January 3, 2001

The Board met at its offices at 450 N Street, Sacramento, at 10:35 a.m. with Chairman Parrish, Vice Chairman Chiang, Mr. Klehs and Mr. Andal present, Ms. Mandel present on behalf of Dr. Connell in accordance with Government Code Section 7.9.

FRANCHISE AND INCOME TAXES HEARINGS

Richard E. Wilmshurst, 55060

1993, $5,680.00 Assessment

For Appellant: No Appearance
For Franchise Tax Board: Cynthia Kent, Tax Counsel

Action: The Board took no action.


Ronald C. & Melinda L. Young, 37458

1988, $ 9,373.00 Assessment, $ 2,343.25 Penalty, Failure to File

1989, $42,093.00 Assessment, $10,523.25 Penalty, Failure to File

1990, $10,315.00 Assessment, $ 2,578.75 Penalty, Failure to File

For Appellant: R. Todd Luoma, Attorney
Ronald Young
For Franchise Tax Board: Terry Collins, Tax Counsel

Contribution Disclosures pursuant to Government Code Section 15626: No contributions were disclosed.

Issues: Whether appellant-husband was a resident of California beginning August 22, 1988, and continuing through 1989 and 1990.

Whether the sale of software rights qualifies as an IRC Section 1235 transaction and whether income received is capital gain or ordinary income.

Whether the penalty for failure to file a return is applicable to each of the years 1988, 1989, and 1990.

Appellant's Exhibit: Affidavit of Susan J.B. Young-Torrey (Exhibit 1.1)
Respondent's Exhibit: Time Schedule (Exhibit 1.2)l

Action: (Motion expunged.).

Mr. Andal moved to expunge the record to allow for more questions.

Upon motion of Mr. Klehs, seconded by Mr. Chiang and duly carried, Mr. Parrish, Mr. Chiang, Mr. Klehs and Ms. Mandel voting yes, Mr. Andal voting no, the Board ordered that the appeal be submitted for decision, granting the Franchise Tax Board 30 days to review and provide additional documentation, the appellant 30 days to respond to the documentation and the Appeals Section 30 days thereafter to bring the matter back to the Board with a final recommendation.

Exhibits to these Minutes are incorporated by reference.


David L. Wiitala, 49620

1997, $3,020.00 Assessment, $ 755.00 Penalty, Delinquent

$1,401.25 Penalty, Demand

For Appellant: David L. Wiitala
For Franchise Tax Board: Suzanne Small, Tax Counsel

Contribution Disclosures pursuant to Government Code Section 15626: No contributions were disclosed.

Issues: Whether appellant is subject to California's income tax laws.

Whether respondent properly determined appellant's tax liability.

Whether appellant has brought a frivolous or groundless position before the Board.

Appellant's Exhibit: Appellant's Hearing Summary (Exhibit 1.3)

Action: Upon motion of Mr. Klehs, seconded by Mr. Andal and unanimously carried, Mr. Parrish, Mr. Chiang, Mr. Klehs, Mr. Andal and Ms. Mandel voting yes, the Board ordered that the appeal be submitted for decision.

The Board recessed at 11:45 am. and reconvened at 1:30 p.m. with Mr. Chiang, Mr. Andal and Ms. Mandel present.


Kimberly-Clark Corporation, 93R-0091, 93R-0898, 93A-1129

1984, $65,580.00 Assessment, $347,237.00 Claim for Refund

1985, $17,348.00 Assessment, $207,486.00 Claim for Refund

1986, $414,876.00 Claim for Refund

For Claimant: Jeffery M. Vesely, Attorney
For Franchise Tax Board: William Weissman, Tax Counsel

Contribution Disclosures pursuant to Government Code Section 15626: No contributions were disclosed.

Issue: Whether respondent properly determined the value of appellant's Canadian timber interests to be included in its property factor for purposes of the unitary apportionment formula.

Mr. Parrish and Mr. Klehs entered the Boardroom.

Respondent's Exhibit: Miscellaneous Documents (Exhibit 1.4)

Action: Upon motion of Mr. Andal, seconded by Mr. Parrish and duly carried, Mr. Parrish, Mr. Chiang, Mr. Andal and Ms. Mandel voting yes, Mr. Klehs voting no, the Board ordered that the claim for refund be submitted for decision, granting the claimant 30 days to file additional briefing on the issue of reasonable market rental rate, Franchise Tax Board 30 days to review and respond to taxpayer's submission and the Appeals Section 30 days thereafter to bring the matter back to the Board with a final recommendation.

BUSINESS TAXES APPEALS HEARINGS

Clark Pacific Corporation, West Coast Precast Corporation & Pacific Coast Precast Corporation, SZ JHF 28-844334; 89000772070

7-1-96 to 12-31-96, $35,586.48 Claim for Refund

For Claimant: Jeffrey W. Curcio, Attorney
Jack R. Kasper, Controller
For Sales and Use Tax Department: Jeffery Graybill, Counsel

Contribution Disclosures pursuant to Government Code Section 15626: No contributions were disclosed.

Issue: Whether the transportation of cement walls, sold by claimant for a delivered price, occurred after the sale of the property to the purchaser.

Action: Upon motion of Mr. Andal, seconded by Mr. Klehs and unanimously carried, Mr. Parrish, Mr. Chiang, Mr. Klehs, Mr. Andal and Ms. Mandel voting yes, the Board ordered that the claim for refund be submitted for decision.

The Board recessed at 2:50 p.m. and reconvened at 2:55 p.m. with Mr. Parrish, Mr. Klehs, Mr. Andal and Ms. Mandel present.


Xerox Corporation, SR Z OHB 98-040852; 89002095430, -400

4-1-93 to 3-31-97, $453,327.14

For Petitioner: Eric J. Miethke, Attorney
R. Charles Phillips, Manager
Robert Gunolach, Consultant/Research Physicist
For Sales and Use Tax Department: David H. Levine, Counsel

Contribution Disclosures pursuant to Government Code Section 15626: No disqualifying contributions were disclosed.

Issues: Whether petitioner's receipt of resale certificates from its copy and print shop customers with the description "consumable supplies" and similar nonspecific descriptions was sufficient to relieve petitioner from liability for the tax.

Whether petitioner's sales of developer were to persons who purchased them for use in manufacturing, producing or processing tangible personal property, and not for the purpose of physically incorporating them into the manufactured article to be sold.

Whether the tax liability at issue resulted from petitioner's reliance on erroneous written advice from the Board, thus warranting relief from the tax and interest with respect to the disallowed claimed sales for resale of developer.

Mr. Chiang entered the Boardroom.

Action: Upon motion of Mr. Klehs, seconded by Mr. Chiang and unanimously carried, Mr. Parrish, Mr. Chiang, Mr. Klehs, Mr. Andal and Ms. Mandel voting yes, the Board ordered that the petition be granted.

Upon motion of Mr. Klehs, seconded by Mr. Andal and unanimously carried, Mr. Parrish, Mr. Chiang, Mr. Klehs and Mr. Andal voting yes, Ms. Mandel abstaining, the Board ordered the Appeals Section to prepare a memorandum opinion.

FINAL ACTION ON APPEALS HEARD JANUARY 3, 2001

Upon motion of Mr. Klehs, seconded by Mr. Andal and unanimously carried, Mr. Parrish, Mr. Chiang, Mr. Klehs, Mr. Andal and Ms. Mandel voting yes, the Board ordered that the appeal of David L. Wiitala, 49620, be denied and imposed a $750.00 frivolous filing penalty.

FINAL ACTION ON PETITIONS HEARD JANUARY 3, 2001

Upon motion of Mr. Andal, seconded by Mr. Klehs and unanimously carried, Mr. Chiang, Mr. Klehs, Mr. Andal and Ms. Mandel voting yes, Mr. Parrish abstaining, the Board ordered that the claim for refund of Clark Pacific Corporation, West Coast Precast Corporation &Pacific Coast Precast Corporation, SZ JHF 28-844334; 89000772070, be denied.


The Board adjourned at 3:35 p.m.



The foregoing minutes are adopted by the Board on March 29, 2001.