Approved 2001 Minutes – Wednesday, May 30, 2001

The Board met at its offices at 450 N Street, Sacramento, at 10:40 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

Hashem Naraghi, 32914
1985, $1,704,177.00 Tax, $1,287,947.51 Penalty

For Appellant: Hashem Naraghi
Rex Halverson, Representative
Gary Daniel, CPA
Wendell Naraghi, Representative
Herb Bowman, CPA
Bernard Simons, Attorney
Larry Scheidt, V. P., Wells Fargo Bank
For Franchise Tax Board: Renel Sapiandante, Tax Counsel
Randy Orlik, Attorney

Contribution: Disclosures pursuant to Government Code Section 15626: No contributions were disclosed.
Issue: Whether appellant was insolvent immediately before and after the transfer of certain real and personal property to a lender’s designee in 1985, pursuant to a loan work-out arrangement. Whether the fair market value of property transferred to the lender’s designee was $19,194,150.00 (as reported by a 1099 provided by the lender) or $11,380,000.00 as reported by appellant on his return. Whether the negligence penalty and the delinquent filing penalty were properly imposed.
Appellant’s Exhibit: Final Settlement Agreement dated 6/28/85 (Exhibit 5.11)
Respondent’s Exhibit: Declarations & Misc. Documents (Exhibit 5.12)

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

Exhibits to these Minutes are incorporated by reference.

The Board recessed at 11:50 a.m. and reconvened at 1:30 p.m. with Mr. Parrish, Mr. Chiang, Mr. Klehs, Mr. Andal and Dr. Connell present.

Edwin S. Nielsen, 61393
1993, $30,063.73 Claim for Refund

For Appellant: Elizabeth L. Grenewegen, Representative
For Franchise Tax Board: John Su, Tax Counsel

Contribution: Disclosures pursuant to Government Code Section 15626: No contributions were disclosed.
Issue: Whether appellant’s claim for refund is barred by the applicable statute of limitations.

Action: Upon motion of Mr. Chiang, seconded by Mr. Klehs and unanimously carried, Mr. Parrish, Mr. Chiang, Mr. Klehs, Mr. Andal and Dr. Connell voting yes, the Board ordered that the action of the Franchise Tax Board be sustained. The Board directed staff to assist appellant with Board of Control Claim.

BOARD PHOTOGRAPH

The annual Board photograph was taken of Mr. Parrish, Mr. Chiang, Mr. Klehs, Mr. Andal and Dr. Connell.

The Board recessed at 1:50 p.m. and reconvened at 2:25 p.m. with Mr. Parrish, Mr. Chiang, Mr. Klehs, Mr. Andal and Dr. Connell present.

PUBLIC COMMENT

Rob Sandman, Placer County Counsel’s Office
John Hahn, County Counsel, Amador County

VALUATION OF STATE ASSESSED PROPERTIES AS OF JANUARY 1, 2001

Upon the motion of Mr. Chiang, seconded by Mr. Andal and unanimously carried, Mr. Parrish, Mr. Chiang, Mr. Klehs, Mr. Andal and Dr. Connell voting yes, the Board ordered that the market value to be used in the assessment of unitary property of the following listed companies as of January 1, 2001 be as follows:

3005 Mobilephone of Humboldt, Inc. 222,000
3039 Fresno Mobile Radio, Inc. 777,000
3052 Vincent Communications, Inc 25,200
3342 High Sierra Mobilfone 16,610
3349 Delta Valley Radiotelephone Company, Inc 28,300
3357 Knox LaRue dba Atlas Radiotelephone Co. 6,700
3360 Sylvan B. Malis dba Coast Mobilphone Service 45,870
3362 Madera Radio Dispatch, Inc. 399,000
3369 Cal-Autofone 331,000
3374 Radio Electronics Products Corporation 48,500
3426 Rob Hanson dba Siskiyou Communications 35,800
3427 Access Paging Company, Inc 81,600
3428 Communications West 4,600

Upon the motion of Mr. Andal, seconded by Mr. Klehs and unanimously carried, Mr. Parrish, Mr. Chiang, Mr. Klehs, Mr. Andal and Dr. Connell voting yes, the Board ordered that the market value to be used in the assessment of unitary property of the following listed companies as of January 1, 2001 be as follows:

3348 Donald G. Pollard dba Siskiyou Mobilfone 5,720
3380 TAS WRCO Corp. dba Tadlock's Communications 101,125
3430 Metrocall, Inc. 9,440,000
3431 Advanced Nationwide Messaging Corporation, Inc. 5,115,000

Upon the motion of Mr. Andal, seconded by Mr. Parrish and unanimously carried, Mr. Parrish, Mr. Chiang, Mr. Klehs, Mr. Andal and Dr. Connell voting yes, the Board ordered that the market value to be used in the assessment of unitary property of the following listed companies as of January 1, 2001 be as follows:

2000 GST Pacific Lightwave, Inc. 67,700,000
2014 Sprint Communications Company L.P. 744,000,000
2022 GST Call America, Inc. 771,000
2035 Cable & Wireless USA, Inc. 49,200,000
2038 GTE Airfone Incorporated 4,560,000
2043 Pac-West Telecomm, Inc. 116,400,000
2054 Spacenet, Inc. 3,260,000
2063 Extelcom, Inc. dba Express Tel 2,950,000
2096 GTE Railfone/Amtrak Venture 10,100
2097 GST Telecom California, Inc. 271,400,000
2099 Smart City Networks LP. 413,000
2100 Preferred Long Distance 3,200
2101 Specialized Telecomms. Services, Inc. 200,200
2131 Bay Area Teleport, Inc. 176,770,000
2207 Global Crossing Telecommunications, Inc. 161,100,000
2213 COMSAT Corporation 14,000,000
2214 COMSAT General Corporation 387,000
2274 MCIWorldCom Network Services, Inc. 1,247,800,000
2275 GE American Communications, Inc. 1,050,500
2293 Western Tele-Communications, Inc. 1,804,000
2322 WorldCom International Data Services, Inc. 28,600,000
2329 Intellicall Operator Services, Inc. 62,480
2351 Global Crossing Bandwidth, Inc. 1,089,000
2368 Globe Wireless, LLC 3,170,000
2372 MCI Metro Access Transmission Services, Inc. 789,500,000
2376 Working Assets Funding Service, Inc. 986,000
2388 GENUiTY TELECOM, INC. 3,050,000
2391 Arrival Communications, Inc. 3,640,000
2401 Communication Service of America, Inc. 2,100
2402 mail.com Business Messaging Services 2,900
2403 Economy Telephone, Inc. 9,900
2405 Fiber Communications of Northern California 469,000
2410 L.D.C. Consultants, Inc. 43,900
2412 Saladin Westco, Inc dba Megawats 247,000
2415 Incomnet Communications Corp. 12,000,000
2416 NOS Communications, Inc. 3,320,000
2418 One Call Communications 87,800
2423 National Brands, Inc. dba Sharenet Communication Co. 1,700
2428 Capsule Communications, Inc. 147,000
2430 Electric Lightwave, Inc. 129,580,000
2431 Peoples Telephone Company 540,100
2432 Claircom Communications Group, Inc. 5,280,000
2433 ICG Telecom of San Diego, L.P. 47,500,000
2436 WorldxChange Communications, Inc. 11,300,000
2437 Dialink Corporation 53,200
2443 National Comtel Network Inc. 16,800
2447 RSL COM USA, Inc. 9,500,000
2448 RhondaCom, Inc. 8,300
2462 ICG Telecom Group, Inc. 282,100,000
2463 QWEST Communications Corporation 675,100,000
2472 Shared Technologies Fairchild Telecom, Inc. 3,553,000
2475 Vartec Telecom, Inc. 3,870,000
7503 Verizon Select Services, Inc. 10,800,000
7507 T-NETIX, Inc. 2,340,000
7512 Citizens Telecommunications Co. 5,570,000
7517 Genesis Communications International, Inc. 933,000
7519 US Voice Telemanagement, Inc. 34,200
7522 Time Warner Telecom of California, L.P. 44,990,000
7524 Fibertel, Inc. 54,500
7525 Fiberlink Communications Corp. 68,860
7527 Lightyear Communications, Inc. 1,870,000
7540 Integrated Teleservices Inc. 84,040
7544 Telswitch, Inc. dba Tel-One 33,000
7545 A&N Telecom, Inc. 119,000
7553 AT&T Broadband Phone of California, LLC 1,610,000
7556 Media One Telecommunications of California, Inc. 70,500,000
7560 XO Communications, Inc. 203,940,000
7562 WinStar Wireless, Inc. 17,300,000
7571 Network Enhanced Technologies, Inc. 986,000
7577 Qwest Interprise America 8,880,000
7579 Exstream Data, Inc. 130,000
7580 Evercom Systems, Inc. 407,000
7581 ABS-CBN Telecom North America, Inc. 405,000
7588 PNG Telecommunications, Inc. 1,540
7621 GE American Communications California, Inc. 7,330,000
7624 Firstworld Communications, Inc. 111,320,000
7625 T Cast Communications, Inc. 868,000
7630 Broadwing Communications Services Inc. 111,700,000
7632 Business Discount Plan, Inc. 319,000
7635 CCI Telecommunications, Inc. 1,320
7636 Network Telephone Services, Inc. 3,620,000
7638 Integrated Telemanagement Services, Inc. 10,500
7639 Pacific Gateway Exchange, Inc. 28,160,000
7640 Cox California Telecom, L.L.C. 95,000,000
7641 GST Net, Inc. 176,000
7642 Fibrcom, Inc. d.b.a. Time Warner Connect 293,000
7645 Communications Brokers & Consultants 10,340
7663 Startec Global Operating Company 5,250,000
7686 Primus Telecommunications, Inc. 6,020,000
7690 California Catalog & Technology (CCT) 4,500
7698 EPOCH Network, Inc. 17,200,000
7700 Cheetah Communications, LLC 90,200
7701 TSI Telecommunications Services, Inc. 22,800
7702 Federal Communications Corporation 66,700
7703 Transcommunications, Inc. 127,000
7705 Sierra Telephone Long Distance 94,100
7706 Covad Communications Company 156,600,000
7707 Roseville Long Distance Company 9,600
7708 San Diego Telecom, Inc. 21,500
7709 PT-1 Communications, Inc. 916,300
7712 Dancris Telecom, LLC 3,900
7713 DSI/Inn-Tel, Inc. 21,900
7714 I-Link, Inc. 580,000
7715 Teligent Services, Inc. 32,000,000
7716 SGA, Inc. dba Americom Communications 278,300
7718 Rhythms Links, Inc. 40,400,000
7720 Intermedia Communications, Inc. 9,185,000
7723 Opentel Communications Inc. 682,000
7724 Mpower Communication Corp. 81,300,000
7727 Sprint Services, Inc. 7,560,000
7728 Convergent Communications Sevices, Inc. 1,910,000
7729 New Global Telecom, Inc. 15,180,000
7732 ntta.com, Inc. 10,900,000
7733 GENUiTY SOLUTIONS, INC. 265,000,000
7735 Pacific Centrex Services, Inc. 65,560
7737 SaveCom International USA, Inc. 322,000
7738 Star Direct Telecom, Inc. 49,400
7740 TRI-M Communications, Inc. 111,000
7742 Allegiance Telecom of California, Inc. 105,800,000
7746 Una Telecommunications, Inc. 5,060
7747 TGEC Communications, Co., LLC 236,000
7749 Teleshare Communications, Inc. 29,920
7751 Star Telecom Network, Inc. 244,000
7754 World Network Communications, Inc. 3,200
7755 Real Navigation Systems Corporation 1,400
7756 Centergistic Solutions 148,000
7758 BT North America Inc. 6,100,000
7759 Focal Communications Corp. of California 39,500,000
7760 Teleglobe USA, Inc. 15,900,000
7761 Level 3 Communications, LLC 905,500,000
7762 Telco Network Services, Inc. 21,500,000
7764 Diamond Link, Inc. 1,350,000
7765 Facilicom International, L.L.C. 8,510,000
7766 KDDI America, Inc. 11,400,000
7769 Airnex Communications, Inc. 498,300
7775 RCN Telecom Services of California Inc. 234,100,000
7776 SmartStop, Inc. 302,000
7777 LDExchange.com 2,640,000
7778 HighSpeed.Com of California, LLC 958,000
7779 360networks (USA) inc. 109,600,000
7780 Premio, Inc. 17,100
7781 Korea Telecom America, Inc. 828,000
7782 Ton Services, Inc. 42,100
7783 U.S. Telefone Holding Company, Inc. 196,000
7786 CCCCA, Inc. 256,000
7788 FNET Corporation 533,000
7789 Multa Communications Corp. 3,650,000
7790 NTC Network, LLC 61,300
7792 Point To Point Inc. 217,800
7796 Samsung Data Systems America, Inc. 90,000
7798 United States Advanced Network, Inc. 2,330,000
7799 Wilshire Connections, LLC 1,020,000
7800 New Edge Network, Inc. 11,000,000
7801 Global West Network, Inc. 1,940,000
7802 Network Enhanced Telecom, LLC 3,850,000
7805 eMeritus Communications, Inc. 313,000
7807 NetStream, Inc. 14,100,000
7808 Nosc Corporation 1,540
7810 California Network Management 33,990
7811 Public Communications Services, Inc. 1,770,000
7812 True America Communications, Inc. 7,810
7813 Advanced Telecom Group, Inc. 31,600,000
7814 PaeTec Communications, Inc. 5,870,000
7815 GTC Telecom Corporation 313,000
7818 Wholesale Telecom, Inc. 49,100
7819 Williams Communications LLC 150,100,000
dba Williams Network, Inc.
7821 oCen Communications, Inc. 3,490,000
7823 U.S. Telestar Communications Group 3,960
7824 Kertel Communications, Inc. 147,000
7825 Premiere Telemedia, Inc. 94,710
7828 Telscape dba: Pointe Local Exchange Company 13,310,000
7832 Seren Innovations, Inc. 123,420,000
7834 Pannon Telecom, Inc. 51,370
7837 Metromedia Fiber Network Services, Inc. 137,940,000
7838 iGlobe, Inc. 1,090,000
7842 Universal Information Services, Inc. 4,100

Upon the motion of Mr. Andal, seconded by Mr. Parrish and unanimously carried, Mr. Parrish, Mr. Chiang, Mr. Klehs, Mr. Andal and Dr. Connell voting yes, Mr. Chiang not participating in Global Crossing North American Networks, Inc. (7536) and McLeodUSA Telecommunications Services, Inc, Dr. Connell not participating in AT&T Communications (2310), Global Crossing North American Networks, Inc. (7536) and Global Photon Systems, Inc. (7794), the Board ordered that the market value to be used in the assessment of unitary property of the following listed companies as of January 1, 2001 be as follows:

2041 Priority 1+ Long Distance 8,500
2310 AT&T Communications 1,213,700,000
2445 CEO Telecommunications, Inc. 911,900
2470 Broadwing Telecommunications, Inc. 166,000
7502 A. S. Telecommunications, Inc. 78,980
7516 Cybernet Communications Inc. 38,500
7536 Global Crossing North American Networks, Inc. 168,000,000
7538 Tremcom International, Inc. 228,000
7573 Worldtel Interative, Inc. 133,750
7575 Mariners Telecomm Group, Inc. 410,000
7677 Talk.Com Holdings Corp. 1,628,000
7699 Legacy Long Distance International 1,437,500
7719 International Exchange Networks, Ltd. 1,211,250
7725 Justice Telecom Corporation 10,483,000
7726 Performance Telecom 360,000
7743 Applied Theory California Corp. 1,375,000
7744 e.spireDATA. Inc. dba e.spire Communications, Inc. 278,300
7757 U.S. TelePacific Corp. 21,780,000
7772 Quantumshift Communications, Inc. 5,220,000
7784 net.world, Inc. 841,500
7785 McLeodUSA Telecommunications Services Inc. 136,000
7791 O1 Communications, Inc. 9,141,000
7793 Big Bear Telecom, Inc. 10,120
7794 Global Photon Systems, Inc. 164,000
7795 Monarch Communications, Inc. 74,800
7804 Hotel Connect Management, Inc. 9,350
7809 Helvey Com, Inc. 7,568,000
7817 Voice Vision International, Inc. 1,452,000
7820 Star Telecommunications, Inc. 27,060,000
7826 Bitro Telecommunications, Inc. 1,650,000
7829 Onsite Access Local, LLC 26,400
7833 INET Interactive Network System, Inc. 2,112,000
7835 MainNet, Inc. 35,200
7836 Telecenter, Inc. 25,520
7839 UBN 9,636,000
7843 Telemanagement Services, Inc. 57,200
7845 San Carlos Telecom, Inc. 79,500
7846 The Telephone Connection Local Services, LLC 120,000
7847 Jones Telecommunications Of California, Inc. 1,030,000
7848 Compass Telecommunications, Inc. 426,000
7849 Tycho Networks, Inc. 384,000
7850 Sempra Communications 21,300
7851 Broadmedia, Inc. 658,000
7852 Telstra Incorporated 1,474,000
7853 iTELCO Communications, Inc. 463,000
7854 Adelphia Business Solutions Operations, Inc. 21,800,000
7855 Enhanced Global Convergence Services, Inc. 612,000
7856 One Point Services, L.L.C. 14,520
7857 LINQ Telecom, Inc. 2,860
7858 North Star Telecom, LLC 2,300
7859 EAS Communications, Inc. 726,000
7860 Pocketpass.com, Inc. 49,200
7861 Looking Glass Network 3,760,000
7862 Bigzoo.com Corporation 448,000
7863 Sentre Telecom, LLC 48,900
7864 Far East Gateway, Inc. 1,060,000
7865 Alta Networks 2,000
7866 Telmex USA, LLC 2,530,000
7867 The Telephone Connection IXC Services, LLC 104,000
7868 Fones 4 All Corporation 36,900
7869 Verizon Advanced Data, Inc. 7,410,000
7870 Communications Express, Inc. 16,200
7871 GTE.NET LLC 1,010,000
7872 Infotech Telecommunications & Network Inc. 3,400
7873 Single Billing Services, Inc. 395,000
7874 Competitve Communications, Inc. 327,800
7875 Allcom USA 6,160
7876 Total Call International, Inc. 685,300
7877 Touch America, Inc. 17,900,000
7878 Novacom Global, Inc. 4,100
7879 2nd Century Communications, Inc. 2,475,000
7880 Quick-Tel, Inc. 3,100
7881 Concert Global Networks USA, LLC 49,390,000
7882 Concert USA, GP 26,620
7883 Telegate, Inc. 1,730,000
7884 Intervoice-Brite 3,960
7885 Advanced Solutions, Inc. 473,200,000
7886 Tele Direct Telecommunications Group, LLC 295,900
7887 AccessLine Communications Corporation 829,400

Upon the motion of Mr. Andal, seconded by Mr. Klehs and unanimously carried, Mr. Parrish, Mr. Chiang, Mr. Klehs, Mr. Andal and Dr. Connell voting yes, the Board ordered that the market value to be used in the assessment of unitary property of the following listed companies as of January 1, 2001 be as follows:

2512 Verizon Wireless - San Diego dba. Verizon Wireless 141,300,000
2513 Sacramento Valley Limited Partnership 224,800,000
2532 Los Angeles SMSA Ltd. Partnership 840,200,000
2552 Fresno MSA Limited Partnership 70,800,000
2559 GTE Mobilnet of California, Ltd. Partnership 320,100,000
2596 Mall Telecommunications 6,000
2602 Digital Communications Network, Inc. 768,000
2605 Nova Cellular West, Inc. 38,800
2606 AT&T Wireless Services of California, Inc. 235,000,000
2616 MCI Wireless, Inc. 9,530,000
2622 Bakersfield Cellular Telephone Company 23,400,000
2626 Santa Barbara Cellular Systems, Ltd. 28,400,000
2627 GTE Mobilnet of Santa Barbara L.P. 30,100,000
2630 Santa Cruz Cellular Telephone Co. 10,300,000
2639 Redding Cellular Partnership 4,480,000
2643 Yuba City Cellular Telephone Company 2,560,000
2649 Action Cellular Rent-A-Phone, Inc. 175,000
2658 Intouch America, Inc. 56,900
2659 Cal-One Cellular, L.P. d.b.a. Cal-North Cellular 7,110,000
2665 WWC License LLC 4,160,000
2667 GTE Mobilnet of Central California, Inc. 2,850,000
2668 California RSA #3 a Limited Partnership 7,630,000 dba Golden State Cellular
2669 California RSA # 4 Partnership 13,500,000
2671 California Rural Service Area # 1, Inc. 19,300,000
2672 El Dorado Cellular d.b.a. Mountain Cellular 3,540,000
2675 Dobson Cellular Systems, Inc. 21,500,000
2676 Nevada County Cellular Corporation 1,370,000
2680 ConexOne Communications, LLC 337,000
2681 Everything Wireless, L.L.C. 90,500
2691 Los Angeles Wireless, Inc. 1,600
2696 Cellular Express, Inc. 428,000
2698 Digital Cellular, Inc. 37,500
2715 Worldwide Cellular Inc. 31,900
2720 Cox Communication PCS, LLP 655,700,000
2722 Sprint Spectrum L.P. 394,700,000
2730 Personal Cellular Services, Inc. 17,400
2731 Gulf Coast Broadcasting Corp. 1,850,000
2732 Nextwave Telecom, Inc. 25,200
2737 Nextel of California, Inc. 587,600,000
2744 Smartel Cellular Telecomm., Inc. 32,100
2745 West Coast P.C.S. 57,300,000
2746 Alpine PCS, Inc. 30,500,000
2748 Cingular (formerly Pacific Bell Wireless) 844,800,000
2749 AT&T Wireless PCS, LLC 62,100,000
2750 National Telemanagement Corporation 26,950

Upon the motion of Mr. Klehs, seconded by Mr. Andal and unanimously carried, Mr. Parrish, Mr. Chiang, Mr. Klehs, Mr. Andal and Dr. Connell voting yes, the Board ordered that the market value to be used in the assessment of unitary property of the following listed companies as of January 1, 2001 be as follows:

2636 Redwood Cellular Communications, Inc. 9,625
2683 Pay-Less Cellular 85,000
2747 VIA Wireless LLC 53,900,000
2752 Pacific Wireless Technologies, Inc. 10,700,000
2753 Edge Wireless, LLC 457,000
2754 Metro One Telecommunications, Inc. 7,470,000

Upon the motion of Mr. Andal, seconded by Dr. Connell and duly carried, Mr. Parrish, Mr. Chiang, Mr. Andal and Dr. Connell voting yes, Mr. Klehs voting no, the Board ordered that the market value to be used in the assessment of unitary property of the following listed companies as of January 1, 2001 be as follows:

2502 Bay Area Cellular Telephone Company 153,400,000
2547 AB Cellular Holding, L.L.C. 286,800,000
2611 Cagal Cellular Communications Corp. 10,500,000
2628 Napa Cellular Telephone Company 10,900,000
2637 Salinas Cellular Telephone Company 13,700,000
2641 Visalia Cellular Telephone Company 4,610,000
2687 SLO Cellular, Inc. 8,730,000

Upon the motion of Mr. Andal, seconded by Mr. Klehs and unanimously carried, Mr. Parrish, Mr. Chiang, Mr. Klehs, Mr. Andal and Dr. Connell voting yes, the Board ordered that the market value to be used in the assessment of unitary property of the following listed companies as of January 1, 2001 be as follows:

400 Standard Gas Company 580,000
402 CalNev Pipe Line Company 65,300,000
407 Valero Refining Company - California 1,600,000
409 West Coast Pipe Lines 152,300,000
410 Homestake Mining Company of California 1,230,000
412 Kings County Canal Company 692,000
428 CPN Pipeline Company 12,600,000
429 Chevron U.S.A., Inc. 32,100,000
432 Equilon Enterprises LLC 134,200,000
435 Natomas Central Mutual Water Company 131,000
461 SFPP, L.P. 369,800,000
462 ARCO Pipeline Company 1,350,000
467 Tosco Corporation 840,000
468 Equilon California Pipeline Company LLC 31,800,000
469 San Ardo Pipeline Company 10,800,000
475 IMC Chemicals, Inc. 1,530,000
476 Texaco Exploration & Production, Inc. 7,280,000
477 Union Island Pipeline Company 3,670,000
479 Chevron Pipeline Company 34,540,000
480 Unocap 52,600,000
483 Mobil Pacific Pipeline Company 2,190,000

Upon the motion of Mr. Andal, seconded by Dr. Connell and unanimously carried, Mr. Parrish, Mr. Chiang, Mr. Klehs, Mr. Andal and Dr. Connell voting yes, the Board ordered that the market value to be used in the assessment of unitary property of the following listed companies as of January 1, 2001 be as follows:

406 Calpine Pittsburg, Inc. 8,250,000
464 Ventura Pipeline System 4,030,000
465 All American Pipeline L.P. 96,600,000
478 California Gas Gathering, Inc. 91,800
484 Calpine Pipeline Corporation 4,680,000

Upon the motion of Mr. Klehs, seconded by Mr. Andal and unanimously carried, Mr. Parrish, Mr. Chiang, Mr. Klehs, Mr. Andal and Dr. Connell voting yes, the Board ordered that the market value to be used in the assessment of unitary property of the following listed companies as of January 1, 2001 be as follows:

800 Alameda Belt Line 4,450,000
801 Amador Central Railroad 136,000
802 Central Oregon & Pacific Railroad 4,270,000
804 The Burlington Northern & Santa Fe Railway Company 665,000,000
808 West Isle Line, Inc. 124,000
812 Ventura County Railroad 2,640,000
815 California Western Railroad, Inc. 1,890,000
817 Tulare Valley Railroad 317,000
818 Central California Traction Company 4,970,000
834 Lake County Railroad 191,000
839 Oakland Terminal Railway Company 113,000
843 Union Pacific Railroad Company 739,500,000
865 San Diego & Imperial Valley Railroad Co. Inc. 3,850,000
869 Santa Maria Valley Railroad Co. 1,520,000
871 Sierra Railroad Company 827,000
878 Stockton Terminal and Eastern Railroad 9,790,000
883 McCloud Railway Company 1,380,000
889 Yreka Western Railroad Co. 440,000
892 Almanor Railroad Company 224,000
894 Napa Valley Wine Train, Inc. 10,700,000
896 Santa Cruz Big Trees & Pacific Railway Co. 773,000
897 San Joaquin Valley Railroad Company 3,000,000
898 Yolo Shortline Railroad Company 582,000

Upon the motion of Mr. Klehs, seconded by Mr. Andal and unanimously carried, Mr. Parrish, Mr. Chiang, Mr. Klehs, Mr. Andal and Dr. Connell voting yes, the Board ordered that the market value to be used in the assessment of unitary property of the following listed companies as of January 1, 2001 be as follows:

810 ParkSierra Corporation dba California Northern Railroad 2,880,000
813 Pacific Harbor Lines 5,570,000

Upon the motion of Dr. Connell, seconded by Mr. Klehs and duly carried, Mr. Chiang, Mr. Klehs and Dr. Connell voting yes, Mr. Parrish and Mr. Andal voting no, the Board ordered that the market value to be used in the assessment of unitary property of the following listed companies as of January 1, 2001 be as follows:

850 Modesto & Empire Traction Company 22,900,000
857 Parr Terminal Railroad 530,000
882 Trona Railway Co. 14,500,000
899 ParkSierra Corp. dba Arizona & Calif. Railroad 5,800,000

Upon the motion of Mr. Andal, seconded by Dr. Connell and unanimously carried, Mr. Parrish, Mr. Chiang, Mr. Klehs, Mr. Andal and Dr. Connell voting yes, the Board ordered that the market value to be used in the assessment of unitary property of the following listed companies as of January 1, 2001 be as follows:

201 Verizon California Inc. 3,919,200,000
202 Telephone Utilities of Eastern Oregon, Inc. 180,000
205 The Ponderosa Telephone Company 26,900,000
209 The Pinnacles Telephone Company 1,040,000
210 Calaveras Telephone Company 6,950,000
228 Ducor Telephone Company 7,220,000
229 Evans Telephone Company 9,910,000
235 Foresthill Telephone Company 3,580,000
239 Hornitos Telephone Company 1,150,000
240 Happy Valley Telephone Company 3,650,000
246 Kerman Telephone Company 5,940,000
270 Citizens Telecom. Co. of The Golden State 17,500,000
279 Pacific Bell 1 2,466,600,000
284 Citizens Telecommunications Co. of California 175,300,000
286 Sierra Telephone Company, Inc. 46,300,000
294 Roseville Telephone Company 191,800,000
301 The Siskiyou Telephone Company 18,500,000
311 Citizens Telecommunications Co. of Tuolumne 8,440,000
320 Verizon West Coast Inc. 14,100,000
327 The Volcano Telephone Company 26,400,000
328 Cal-Ore Telephone Company 5,010,000
330 Winterhaven Telephone Company 2,080,000

Upon the motion of Dr. Connell, seconded by Mr. Klehs and unanimously carried, Mr. Parrish, Mr. Chiang, Mr. Klehs, Mr. Andal and Dr. Connell voting yes, the Board ordered that the market value to be used in the assessment of unitary property of the following listed companies as of January 1, 2001 be as follows:

101 Southern California Water Company 322,400,000
103 Anza Electric Cooperative, Inc. 12,800,000
106 Pacificorp 154,800,000
146 Sierra Pacific Power Company 186,400,000
149 Southern California Gas Co. 2,426,200,000
152 Southwest Gas Corporation 104,900,000
160 Valley Electric Association, Inc. 44,800
173 Surprise Valley Electrification Corp. 13,000,000
176 Plumas-Sierra Rural Electric Cooperative 24,900,000
184 Avista Corporation 9,580,000
185 Mountain Utilities 3,830,000
187 Mojave Pipeline Company 108,200,000
189 Standard Pacific Gas Line, Inc. 19,500,000
190 Tuscarora Gas Transmission Company 68,700,000
191 Arizona Public Service Company 3,180,000
192 Alpine Natural Gas Operating Co. No. One LLC 2,970,000
193 Arizona Electric Power Cooperative, Inc. 154,000
194 West Coast Gas Company, Inc. 898,000
196 Questar Line 90 Company 24,000,000

Upon the motion of Mr. Andal, seconded by Mr. Chiang and unanimously carried, Mr. Parrish, Mr. Chiang, Mr. Klehs, Mr. Andal and Dr. Connell voting yes, the Board ordered that the market value to be used in the assessment of unitary property of the following listed companies as of January 1, 2001 be as follows:

141 San Diego Gas & Electric Company 2,614,500,000
188 Kern River Gas Transmission Company 133,100,000
195 Wild Goose Storage, Inc. 41,900,000
197 EPNG Pipeline Company 39,500,000
198 Lodi Gas Storage, L.L.C. 2,790,000
199 Clean Earth Energy, Inc. 3,400

Upon the motion of Mr. Chiang, seconded by Mr. Klehs and duly carried, Mr. Chiang and Mr. Klehs voting yes, Mr. Parrish voting no, Mr. Andal and Dr. Connell not participating, the Board ordered that the market value to be used in the assessment of unitary property of the following listed companies as of January 1, 2001 be as follows:

135 Pacific Gas & Electric Company 12,261,600,000
148 Southern California Edison Co. 8,727,100,000

Upon the motion of Mr. Andal, seconded by Dr.Connell and duly carried, Mr. Parrish, Mr. Andal and Dr. Connell voting yes, Mr. Chiang and Mr. Klehs voting no, the Board ordered that the market value to be used in the assessment of unitary property of the following listed companies as of January 1, 2001 be as follows:

486 Pacific Pipeline System, LLC 189,000,000

The Board recessed at 2:45 p.m. and reconvened at 3:00 p.m. with Mr. Parrish, Mr. Klehs, Mr. Andal and Ms. Mandel present on behalf of Dr. Connell in accordance with Government Code Section 7.9.

PUBLIC HEARING – PROPOSED AMENDMENT TO REGULATION 1699, PERMITS

Mr. Parrish announced the public hearing of Sales and Use Tax Regulation 1699, Permits.

Janice Thurston, Assistant Chief Counsel, Business Taxes, reported that Regulation 1699, is proposed to be amended to interpret and make specific Revenue and Taxation Code section 6066. The amendment and adoptions are necessary to clarify the application of sales and use tax to sales by, and by retailers who employ, concessionaires. Ms. Thurston reported that a nonsubstantive change needed to be made in the published version of the regulation.

Speakers: Speakers were invited to address the Board, but there were none.

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 adopted regulation 1699, with the nonsubstantive change as recommended by staff (Exhibit 5.13).

CORPORATE FRANCHISE AND PERSONAL INCOME TAX APPEALS HEARINGS

Michael Galotta, Sr., 83320
1998, $2,261.00 Assessment, $565.25 Penalty, Delinquent
$565.25 Penalty, Demand

For Appellant: No Appearance
For Franchise Tax Board: Lisa Lawson, Administrator II

Contribution: Disclosures pursuant to Government Code Section 15626: No contributions were disclosed.
Issues: Whether respondent properly assessed tax to appellant for income that had been reported on a partnership’s Form 1065, Schedule K-1, and three Form 1099’s for 1998. Whether a late filing penalty, a notice and demand penalty, and a filing enforcement fee were properly imposed for 1998.

Action: Upon motion of Mr. Andal, seconded by Ms. Mandel and unanimously carried, Mr. Parrish, Mr. Klehs, Mr. Andal and Ms. Mandel voting yes, Mr. Chiang absent, the Board ordered that the action of the Franchise Tax Board be sustained.

J.R. Simplot Company & Subsidiaries, 89979
1993, $35,667.00 Assessment
1994, $43,556.00 Assessment
1995, $72,740.00 Assessment

For Appellant: Appearance Waived
For Franchise Tax Board: Sukhdev Rye, Tax Counsel

Contribution: Disclosures pursuant to Government Code Section 15626: No contributions were disclosed.
Issues: Whether sales made by appellant’s non-California unitary subsidiaries to California customers should be excluded from the numerator of appellant’s sales factor for purposes of determining appellant’s proper California apportionment factor; and whether the Huffy apportionment rule should be applied retroactively.

Action: Upon motion of Mr. Andal, seconded by Mr. Klehs and unanimously carried, Mr. Parrish, Mr. Klehs, Mr. Andal and Ms. Mandel voting yes, Mr. Chiang absent, the Board ordered that the action of the Franchise Tax Board be sustained.

Christopher Jorgensen Wilder, 49621
1996, $604.00 Assessment, $ 151.00 Penalty, Late Filing
$ 347.00 Penalty, Demand
1997, $585.00 Assessment, $ 146.25 Penalty, Late Filing
$1,084.00 Penalty, Demand

For Appellant: Christopher Wilder
For Franchise Tax Board: Craig Scott, Tax Counsel

Contribution: Disclosures pursuant to Government Code Section 15626: No contributions were disclosed.
Issues: Whether appellant has demonstrated that he did not earn "gross income’ and so is not liable for California Personal Income Tax. Whether appellant has shown that reasonable cause exists such that the penalties should be abated. Whether a frivolous appeal penalty should be imposed upon appellant. The Franchise Tax Board stated for the record that they have conceded the notice and demand penalties for both 1996 and 1997. Appellant’s Exhibit: Letter (Exhibit 5.14)

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

Upon motion of Mr. Andal, seconded by Mr. Klehs and duly carried, Mr. Parrish, Mr. Klehs and Mr. Andal and voting yes, Mr. Chiang and Ms. Mandel voting no, the Board ordered that the action of the Franchise Tax Board be sustained and that a $500 frivolous appeal penalty be imposed.

BUSINESS TAXES APPEALS HEARINGS

John Michael & Mary Jane Ferrell, SR S KHA 99-978107; 28174
9-1-96 to 9-8-96, $7,163.56 Tax, $00.00 Penalty

For Petitioner: No Appearance
For Sales and Use Tax Department: Jeffery Graybill, Counsel

Action: The Board took no action.

Fooad Laghaei, SR BH 19-760382; 89000285770
1-1-94 to 12-31-96, $27,462.44 Tax, $2,918.45 Penalty, Negligence

For Petitioner: Abe Golomb, Representative
For Sales and Use Tax Department: Mark Woolsten, Hearing Representative

Contribution: Disclosures pursuant to Government Code Section 15626: No contributions were disclosed.
Issues: Whether petitioner has provided evidence to show that the additional measure of tax includes non-sales receipts, such as loans and cash advances. Whether relief from the negligence penalty is warranted.

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 petition be submitted for decision.

Mason Shoe Manufacturing Company, SC OHA 99-000752; 89002099220
4-1-95 to 3-31-98, $1,597,034.07 Tax

For Petitioner: Roy E. Crawford, Counsel
For Sales and Use Tax Department: Warren Astleford, Counsel

Contribution: Disclosures pursuant to Government Code Section 15626: No contributions were disclosed.
Issues: Whether petitioner was engaged in business in this state prior to January 1997. Whether the separate corporate identity of petitioner’s wholly owned subsidiary should be disregarded such that petitioner, rather than the subsidiary, is the true retailer of the sales at issue herein.

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 petition be submitted for decision.

FINAL ACTION ON PETITIONS HEARD MAY 30, 2001

Mr. Andal moved that the petition be redetermined. The motion was seconded by Mr. Klehs. No vote was taken.

Mr. Parrish made a substitute motion to remove the penalty. The motion was seconded by Mr. Andal but failed to carry, Mr. Parrish voting yes, Mr. Chiang, Mr. Andal, Mr. Klehs and Ms. Mandel voting no.

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 petition of Fooad Laghaei, SR BH 19-760382; 89000285770, be redetermined as recommended by the Appeals Section.

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 petition of Mason Shoe Manufacturing Company, SC OHA 99-000752; 89002099220, be redetermined as recommended by the Appeals Section.

The Board adjourned at 4:17 p.m.


The foregoing minutes are adopted by the Board on August 1, 2001.