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.