Approved 2000 Minutes - Thursday September 14, 2000

The Board met at its offices at 450 N Street, Sacramento, at 9:30 a.m. with Chairman Andal, Mr. Parrish and Mr. Chiang present.

ANNOUNCEMENT OF CLOSED SESSION

The Board went immediately into closed session with Mr. Andal,

Mr. Parrish and Mr. Chiang present.

CLOSED SESSION

The Board met to discuss personnel matters and Revenue and Taxation Code 7093.5 and 50156.11 settlements and pending litigation.

The Board recessed at 9:30 a.m. and reconvened at 10:00 a.m. in open session with Mr. Andal, Mr. Parrish and Mr. Chiang present.

PROPOSED YEAR 2001 BOARD WORKLOAD PLAN AND BOARD HEARING PROCEDURE QUESTIONS AND ISSUES

Upon the motion of Mr. Chiang, seconded by Mr. Parrish and unanimously carried, Mr. Andal, Mr. Parrish and Mr. Chiang voting yes, Mr. Klehs and Dr. Connell absent, the Board adopted the 2001 Board Workload Plan (Exhibit 9.1)

The Board deferred consideration of the second item, Board Hearing Procedure Questions and Issues, to the October Board meeting.

Exhibits to these Minutes are incorporated by reference.

RETIREMENT RESOLUTIONS

Upon the motion of Mr. Chiang, seconded by Mr. Parrish and unanimously carried, Mr. Andal, Mr. Parrish and Mr. Chiang voting yes, Mr. Klehs and Dr. Connell absent, the Board adopted the following resolutions, extending to Michael E. Shepard, Supervising Tax Auditor I, San Jose District Office, Mary Lou Pettit, Tax Technician I, San Francisco District Office, Janet F. Verbin, Tax Technician III, Culver City District Office, Cheryl Engel, Staff Services Manager I, Administrative Support Unit, Technology Services Division, Headquarters, Sergio M. Bautista, Tax Technician II, West Covina District Office, Stephen A. Biggers, Business Taxes Compliance Supervisor II, Santa Rosa District Office, Gloria S. Bautista, Tax Technician II, West Covina District Office, its best wishes on their resprective retirements and its appreciation for their service to the Board and the State of California (Exhibit 9.2).

BOARD MEETING MINUTES

Upon the motion of Mr. Chiang, seconded by Mr. Parrish and unanimously carried, Mr. Andal, Mr. Parrish and Mr. Chiang voting yes, Mr. Klehs and Dr. Connell absent, the Board approved the minutes of its meetings of June 27-30, 2000.

Upon the motion of Mr. Chiang, seconded by Mr. Parrish and unanimously carried, Mr. Andal, Mr. Parrish and Mr. Chiang voting yes, Mr. Klehs and Dr. Connell absent, the Board approved the correction to the minutes of its meeting of June 15, 2000.

CALENDAR YEAR 2001 DIESEL FUEL TAX RATE FOR INTERSTATE USERS' (AB 1269)

Upon motion of Mr. Chiang, seconded by Mr. Parrish and unanimously carried, Mr. Andal, Mr. Parrish and Mr. Chiang voting yes, Mr. Klehs and Dr. Connell absent, the Board ordered that the 2001 Diesel Fuel Tax Rate for Interstate Users' be approved. Copy of the approved rate in incorporated in these minutes by reference (Exhibit 9.3).

PROPOSED BASE FEE RATES

Upon the motion of Mr. Chiang, seconded by Mr. Parrish, and

unanimously carried, Mr. Andal, Mr. Parrish and Mr. Chiang voting yes, Mr. Klehs and Ms. Connell absent, the Board ordered that the 2001 base fee rates for Activity Fees, Disposal Fees, Environmental Fees, Facility Fees, Generator Fees, Permit by Rule and Occupational Lead Poisoning Fee be approved. A copy of the approved rates in incorporated in these minutes by reference (Exhibit 9.4).

LEGISLATIVE COMMITTEE REPORT

Ms. Margaret Shedd, Legislative Counsel, Legislative Division, presented the Legislative Committee Report.

Upon motion of Mr. Chiang, seconded by Mr. Parrish and

unanimously carried, Mr. Andal, Mr. Parrish and Mr. Chiang voting yes, Mr. Klehs and Dr. Connell absent, the Board approved the revised committee report (Exhibit 9.5).

PROPERTY TAX COMMITTEE REPORT

Mr. Dick Johnson, Deputy Director, Property Tax Department, presented the Property Tax Committee Report.

Upon motion of Mr. Chiang, seconded by Mr. Parrish and unanimously carried, Mr. Andal, Mr. Parrish and Mr. Chiang voting yes, Mr. Klehs and Dr. Connell absent, the Board approved the committee report (Exhibit 9.6).

BUSINESS TAXES COMMITTEE REPORT

Mr. Ramon Hirsig, Deputy Director, Sales and Use Tax Department, presented the Business Taxes Committee Report.

Upon motion of Mr. Parrish, seconded by Mr. Chiang and

duly carried, Mr. Parrish and Mr. Chiang voting yes, Mr. Andal voting no, Mr. Klehs and Dr. Connell absent, the Board approved the committee report (Exhibit 9.7).

CUSTOMER SERVICES & ADMINISTRATIVE EFFICIENCY COMMITTEE

Ms. Delena Bratton, Chief, Customer and Taxpayer Services Division, presented the Customer Services Committee Report.

Upon motion of Mr. Parrish seconded by Mr. Chiang and unanimously carried, Mr. Andal, Mr. Parrish and Mr. Chiang voting yes, Mr. Klehs and Dr. Connell absent, the Board approved the revised committee report (Exhibit 9.8).

Dr. Connell entered the Boardroom.

PROPERTY TAXES HEARINGS

PUBLIC COMMENTS: Bruce Dear, Placer County Assessor, Placer County

Gerald O. Carden, Chief Deputy County Counsel, Placer County

William G. Copren, Sierra County Assessor, Sierra County

Letter (Exhibit 9.9)

Allen A. Haim, Special Counsel, County of Sierra

David Brown, Assessor, Yuba County

Yuba County Utility Roll (Exhibit 9.10)

Lon W. House, Consultant, Regional Council of Rural Counties

Brent Hastey, Supervisor Chairman of the Board, Yuba County

Pacific Gas & Electric Company (135), SAU 00-018; 75859

2000, $13,542,150,713.00

For Petitioner: Eric Miethke, Attorney
Richard H. Moss, Attorney
For Property Taxes Department: Robert Lambert, Counsel

Contribution Disclosures pursuant to Government Code Section 15626: A disqualifying contribution was disclosed to Mr. Chiang. No other disqualifying contributions were disclosed.

Issue:Whether or not the petitioner has taxable possessory interests in certain hydroelectric projects of: (1) the Merced Irrigation District; (2) the Yuba County Water Agency; (3) the Placer County Water Agency; (4) the Nevada Irrigation District; and the (5) the Oroville-Wyandotte Irrigation District.

Petitioner's Exhibit: Letters (Exhibit 9.11)

Staff's Exhibit: Property Tax Rule 20 (C)(2) (Exhibit 9.12)

Action: Upon motion of Dr. Connell, seconded by Mr. Parrish and unanimously carried, Mr. Andal, Mr. Parrish and Ms. Connell voting yes, Mr. Chiang not participating in accordance with Government Code Section 15626, Mr. Klehs absent, the Board deferred consideration of this matter to the November Culver City meeting.

The Board recessed at 11:10 and reconvened at 11:20 with Mr. Andal,

Mr. Parrish and Mr. Chiang present.

CHIEF COUNSEL MATTERS

Upon motion of Mr. Chiang, seconded by Mr. Parrish and unanimously carried, Mr. Andal, Mr. Parrish, Mr. Chiang voting yes, Mr. Klehs and Dr. Connell absent, the Board adopted the revision to the Incompatible Activities Statement.

Upon motion of Mr. Chiang, seconded by Mr. Parrish and unanimously carried, Mr. Andal, Mr. Parrish and Mr. Chiang voting yes, Mr. Klehs and Dr. Connell absent, the Board authorized to publish the proposed amendments to the State Board of Equalization's Conflict of Interest Code.

Ms. Mandel entered on behalf of Dr. Connell in accordance with Government Code Section 7.9.

Mr. Parrish moved to deny the filing of Sales and Use Tax Regulation 1584, Membership Fees, with the Office of Administrative Law as a Section 100 change, seconded by Mr. Andal but failed to carry, Mr. Andal, Mr. Parrish voting yes, Mr. Chiang and Ms. Mandel voting no, Mr. Klehs absent.

The Board deferred consideration of this matter to the next Board meeting.

Upon motion of Mr. Parrish, seconded by Mr. Chiang and unanimously carried, Mr. Andal, Mr. Parrish, Mr. Chiang and Ms. Mandel voting yes, Mr. Klehs absent, the Board approved filing Property Tax Rule 313, Hearing Procedure, with the Office of Administrative Law as a Section 100 change. A copy of the regulation is incorporated in these minutes by reference (Exhibit 9.13).

LEGAL APPEALS MATTERS, ADJUDICATORY

Globe Auto Sales, Inc., SR AC 13-799210-010; 89000079450

4-1-94 to 9-30-97, $273,861.58 Tax, $68,465.46 Penalty

Considered by the Board:June 27, 2000

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

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

Mos Electronics Corporation, SR GH 26-756363-010; 89000664190

1-1-90 to 12-31-92, $25,293.14 Tax, $4,753.20 Penalty

Moselic Vitelic Corporation, SR GH 26-760550-010; 89000665320

10-1-91 to 3-31-9, $5,802.23 Tax

Considered by the Board:Hearing Notice Sent - No Response

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

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

Neil M. and Lorraine K. MacSwain, SR GH 99-485271-010; 89002277020

5-10-94 to 3-31-97, $1,595.78 Tax

Considered by the Board:Hearing Notice Sent - No Response

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

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

KMS Research Laboratories, Inc. SR JHH 29-649488-010; 89000800570

7-1-92 to 6-30-95, $49,881.10 Tax

Considered by the Board:Hearing Notice Sent - Appearance Waived

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

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

Victor Moulding Company, SY CH 21-153637-010; 89000310070

7-1-91 to 9-30-94, $58,644.16 Tax

Considered by the Board:Hearing Request Withdrawn

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

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

Balwant Rai Birla & Sudesh Birla, CP ET 50-001677-010, CR ET 02-001247-010; 89000959600, 89000005140

Balwant Rai Birla, Sudesh Birla, & Nuts and Spice Company, CO ET 50-000881-010, CR ET 02-001177-010; 89000959530, 89000005070

1-12-93 through 11-17-95, $73,277.81 Tax, $7,327.86 Penalty

Considered by the Board:July 26, 2000

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

Action: Upon motion of Ms. Mandel seconded by Mr. Chiang and duly carried, Mr. Parrish, Mr. Chiang and Mr. Andal voting no, Mr. Klehs absent, the Board ordered the petition be redetermined as recommended by the Appeals Section.

Nouveau Collections, Inc., SR AS 11-813131-010; 89000035300

7-1-92 to 5-24-95, $55,990.19 Tax

Considered by the Board:June 27, 2000

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

Action: Upon motion of Ms. Mandel seconded by Mr. Parrish and unanimously carried, Mr. Andal, Mr. Parrish, Mr. Chiang and Ms. Mandel voting yes, Mr. Klehs absent, the Board ordered the petition be redetermined as recommended by Appeals.

Bernacchi-Perry, Inc., SR EA 25-878136-010; 89000605670

4-1-94 to 3-31-97, $5,114.19 Tax

Considered by the Board:June 27, 2000

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

Action: Upon motion of Ms. Mandel, seconded by Mr. Chiang and duly carried, Mr. Andal, Mr. Chiang and Ms. Mandel voting yes, Mr. Parrish voting no, Mr. Klehs absent, the Board ordered to deny the petition for rehearing as recommended by Appeals.

Bechtel Petroleum Operations, Inc.

Elk Hills Naval Petroleum Reserve No. 1

HF HQ 36-019715-010; 89000911720

7/01/87 through 6/30/88

$10,780.00

HG HQ 36-043257-001; 89000917590

1992

$14,330.00

HF HQ 38-001990-010; 89000929240

7/01/88 through 6/30/89

$0.00

HF HQ 38-001990-001; 89000929230

Various Periods 1986 through 1995

$1,100910.00

Considered by the Board:June 27, 2000

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

Action: Upon motion of Mr. Parrish, seconded by Mr. Andal and unanimously carried, Mr. Andal, Mr. Parrish, Mr. Chiang voting yes and Ms. Mandel abstaining, and Mr. Klehs absent, the Board ordered to deny the petition for rehearing as recommended by the Appeals Section.

FRANCHISE AND INCOME TAX MATTERS, ADJUDICATORY

Consolidated Freightways, Inc., 98A-0499; 89002460300

1984, $644,979.00 Assessment

1985, $392,220.00 Assessment

1986, $737,302.00 Assessment

Considered by the Board: June 15, 2000

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

Action: Upon motion of Mr. Chiang, seconded by Mr. Parrish and unanimously carried, Mr. Andal, Mr. Parrish and Mr. Chiang voting yes, Ms. Mandel not participating, Mr. Klehs absent, the Board adopted the Memorandum Opinion.

Paul B. and Mary A. Milhous, 99A-0186; 89002466650

1993, $227,246.00 Assessment

Robert E. and Gail P. Milhous, 99A-0187; 89002466660

1993, $670,825.00 Assessment

Considered by the Board: May 4, 2000

Action: The Board took no action.

Yamaha Motor Corp., USA, 99A-0226; 89002467500

1989, $ 3,593.00 Assessment

1990, $229,623.00 Assessment

1991, $ 9,038.00 Assessment

Considered by the Board: June 30, 2000

Action: The Board took no action.

Electric Machine Entertainment, Inc., 99R-0447, 18027

1996, $520.39 Claim for Refund

Submitted for decision: December 7, 1999

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

Action: Upon motion of Mr. Chiang, seconded by Mr. Parrish and unanimously carried, Mr. Andal, Mr. Parrish, Mr. Chiang and Ms. Mandel voting yes, Mr. Klehs absent, the Board adopted a decision sustaining the action of the Franchise Tax Board.

Brenda Estrada, 34327

1997, $254.86 Claim for Refund

Considered by the Board: August 10, 2000

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

Action: Upon motion of Mr. Chiang, seconded by Mr. Andal and unanimously carried, Mr. Andal, Mr. Parrish, Mr. Chiang and Ms. Mandel voting yes, Mr. Klehs absent, the Board adopted a decision sustaining the action of the Franchise Tax Board.

Carl M. Nagata, 99R-0360; 89002469750

1997, $139.14 Claim for Refund

Submitted for decision: November 30, 1999

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

Action: Upon motion of Mr. Chiang, seconded by Mr. Andal and unanimously carried, Mr. Andal, Mr. Parrish, Mr. Chiang and Ms. Mandel voting yes, Mr. Klehs absent, the Board adopted a decision sustaining the action of the Franchise Tax Board.

Leon R. and Barbara K. Peikin, 33783

1989, $1,453.62 Claim for Refund

Submitted for decision: March 3, 2000

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

Action: Upon motion of Mr. Chiang, seconded by Mr. Parrish and unanimously carried, Mr. Andal, Mr. Parrish, Mr. Chiang and Ms. Mandel voting yes, Mr. Klehs absent, the Board adopted a decision sustaining the action of the Franchise Tax Board.

Homer and Elizabeth Beldt, 97A-0635; 89002466440

1990, $261,781.00 Assessment

1991, $ 3,104.00 Assessment

Considered by the Board:February 4, 2000

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

Action: Upon motion of Mr. Chiang, seconded by Mr. Andal and unanimously carried, Mr. Andal, Mr. Parrish, Mr. Chiang and Ms. Mandel voting yes, Mr. Klehs absent, the Board adopted a decision denying the petition for rehearing.

Max E. and Betty D. Meyer, 98A-1321; 89002466640

1993, $4,564.00 Assessment

Considered by the Board:February 4, 2000

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

Action: Upon motion of Mr. Chiang, seconded by Mr. Andal and unanimously carried, Mr. Andal, Mr. Parrish and Mr. Chiang voting yes, Ms. Mandel not participating, Mr. Klehs absent, the Board adopted a decision denying the petition for rehearing.

Leonard Jaffe, 30751

1991, $12,390.00 Assessment

1992, $ 2,182.00 Assessment

Submitted for decision: June 30, 2000

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

Action: Upon motion of Mr. Parrish, seconded by Ms. Mandel and unanimously carried, Mr. Andal, Mr. Parrish, Mr. Chiang and Ms. Mandel voting yes, Mr. Klehs absent, the Board adopted a decision modifying the action of the Franchise Tax Board.

SALES AND USE TAX MATTERS, ADJUDICATORY

Westland Graphics, Inc., SR AP 099-696542; 51927

7-1-96 to 9-30-96, $59,787.27 Claim for Refund

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

Action: Upon motion of Mr. Parrish, seconded by Mr. Chiang and unanimously carried, Mr. Andal, Mr. Parrish, Mr. Chiang and Ms. Mandel voting yes, Mr. Klehs absent, the Board approved the denial of claim for refund as recommended by staff.

SALES AND USE TAX MATTERS CREDITS, CANCELLATIONS, AND REFUNDS, ADJUDICATORY

Cigarettes Cheaper!, SR Y JHF 099-793094; 67013

December, 1999, $98,671.86 Penalty

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

Action: Upon motion of Mr. Chiang, seconded by Mr. Parrish and unanimously carried, Mr. Parrish, Mr. Chiang and Ms. Mandel voting yes, Mr. Andal not participating, Mr. Klehs absent, the Board approved to grant the relief of penalty as recommended by staff.

LEGAL APPEALS MATTERS, CONSENT

With respect to the Legal Appeals Matters Consent Agenda, upon a single motion of Mr. Parrish, seconded by Mr. Chiang and unanimously carried, Mr. Andal, Mr. Parrish, Mr. Chiang and Ms. Mandel voting yes, Mr. Klehs absent, Ms. Mandel not participating in Chemoil Refining Corporation, MD MT 007-001355;89000006410, the Board made the following orders:

Luis Hernandez Dominguez, SY DH 22-853725-010; 89000395840

10-1-93 to 9-30-96, $12,816.76 Tax, $1,281.73 Penalty

Considered by the Board:Hearing Notice Sent - No Response

Action: Redetermine as recommended by the Appeals Section.

Window Energy Systems, Inc., SY GH 26-796097-001; 89000676730

10-1-94 to 6-30-95, $14,060.28 - Claim for Refund

Considered by the Board:Hearing Notice Sent - No Response

Action: Redetermine as recommended by the Appeals Section.

Latif Faed and Zahra Faed, TK MT 44-038912-010, -020; 89000950320, -0330

1/1/94 to 12/31/97, $17,829.39 Tax, $00.00 Penalty

Latif Faed and Zahra Faed, TK MT 44-038854-010, -020; 89000950350, -0360

7/15/95 to 12/31/97, $12,382.34 Tax, $00.00 Penalty

Considered by the Board:Hearing Notice Sent - No Response

Action: Redetermine as recommended by the Appeals Section.

W. Scott Vanderhorst, SP UT 82-655525-010; 89001140300

4-30-97, $1,520.25 Tax, $152.03 Penalty

Considered by the Board:Hearing Notice Sent - No Response

Action: Redetermine as recommended by the Appeals Section.

Jason Michael Cotter, SR AR 99-660717-010; 89000773430

10-1-89 to 12-31-94, $17,500.00 Tax

Considered by the Board:Hearing Notice Sent - No Response

Action: Redetermine as recommended by the Appeals Section.

Dennis B. and Christie L. Costa, SR KHD 28-848219-020; 89000773430

7-1-92 to 6-30-95, $29, 505.79 Tax, $2,950.56 Penalty

Considered by the Board:Hearing Notice Sent - Appearance Waived

Action: Redetermine as recommended by the Appeals Section.

Craig E. Bonelli, SS CHB 21-839464-010; 89000342510

4-1-93 to 12-31-95, $47,516.77 Tax, $4,744.42 Penalty

Considered by the Board:Hearing Notice Sent - Appearance Waived

Action: Redetermine as recommended by the Appeals Section.

Caffa Industries, Inc. SR DH 22-702644-010; 89000366100

4-1-93 to 10-31-95, $74,934.79 Tax, $00.00 Penalty

Considered by the Board:Hearing Notice Sent - Appearance Waived

Action: Redetermine as recommended by the Appeals Section.

Lone Eagle, Inc., SP UT 82-656034-010; 89001140820

4/30/97, $66,586.03 Tax

Considered by the Board:Hearing Notice Sent - Appearance Waived

Action: Redetermine as recommended by the Appeals Section.

Taisir Mustafa Aburashed and Sana Rashed Aburashed; SR AR 99-216220-010; 89002152120

10/1/94 to 9/30/97, $9,013.14 Tax

Considered by the Board:Hearing Notice Sent - Appearance Waived

Action: Redetermine as recommended by the Appeals Section.

Mark Philip Crase, SR EHC 23-726443-010; 89000407390

4/1/93 to 9/30/96, $00.00 Tax

Considered by the Board:Hearing Notice Sent - Appearance Waived

Action: Redetermine as recommended by the Appeals Section.

Chemoil Refining Corporation, MD HQ 07-001355-010; 89000006410

1-1-91 to 12-31-93, $9,198.81 Tax, $919.82 Penalty

Considered by the Board:Hearing Notice Sent - Appearance Waived

Action: Redetermine as recommended by the Appeals Section. Ms. Mandel not participating.

John H. Capman (Deceased), SR BH 19-627889-010; 89000259130

10-1-94 to 12-31-96, $26,892.81 Tax, $00.00 Penalty

Considered by the Board:Petition for Rehearing

Action: Redetermine as recommended by the Appeals Section.

Roger E. and Sandra J. Mantz, SR CHA 21-856052-010 through -090; and -0A0; 89000347480, -490, -500, -510, -520, -530, -540, -550, -560, -570

11-1-90 to 4-1-94, $237,110.94 Tax, $59,277.74 Penalty

SR CHA 21-666013-010 through -090; -0A0, -0B0, -0C0, -0D0 and 0E0; 89000316490, -510, -560, -570, -580, -590, -600, -610, -620

1-1-86 to 12-31-95, $281,689.11 Tax, $70,422.28 Penalty

Considered by the Board:Petition for Rehearing

Action: Deny the petition for rehearing.

FRANCHISE AND INCOME TAX MATTERS, CONSENT

The Board deferred consideration of the following Gregory J. and LeeAnn

N. Kaderabek, 27966, David R. and Veronica C. Keim, 99A-0455; 18049, William G. and Norma Maloney II, 32926, Jeffrey and Carol Miles, 33753, Kimberly-Clark Corporation, 93R-0091, 93R0898, 93A-1129;89002463540, and The Pillsbury Company, 98A-1358; 89002464970.

With respect to the Franchise and Income Tax Matters Consent Agenda,

upon a single motion of Mr. Chiang, seconded by Mr. Parrish and unanimously carried, Mr. Andal, Mr. Parrish, Mr. Chiang and Ms. Mandel voting yes, Mr. Klehs absent, the Board made the following orders:

Raymond and Debbie Bishop, 47618

1995, $1,094.00 Assessment

Action: Sustain the action of the Franchise Tax Board.

Marlies Capobianco, 28470

1995, $158.00 Assessment

Action: Sustain the action of the Franchise Tax Board.

Joyce R. Crisp, 27780

1981, $3,474.15 Claim for Refund

Action: Sustain the action of the Franchise Tax Board.

Morgan P. Dailey and Marcelle M. Burke, 26800

1994, $3,634.00 Claim for Refund

Action: Sustain the action of the Franchise Tax Board.

Charles K. Farr and Marlo Viehweg-Farr, 99R-0449; 18038

1996, $4,078.00 Claim for Refund

1997, $4,850.00 Claim for Refund

Action: Sustain the action of the Franchise Tax Board.

Luis A. Isip, 29937

1992, $1.00 or more Claim for Refund

Action: Sustain the action of the Franchise Tax Board.

Gregory J. and LeeAnn N. Kaderabek, 27966

1993, $660.00 Assessment

Action: The Board deferred consideration of this matter.

David R. and Veronica C. Keim, 99A-0455; 18049

1993, $840.00 Assessment

Action: The Board deferred consideration of this matter.

William G. and Norma Maloney II, 32926

1994, $962.00 Assessment

Action: The Board deferred consideration of this matter.

Jeffrey and Carol Miles, 33753

1995, $456.00 Assessment

Action: Sustain the action of the Franchise Tax Board.

Wayne R. DeLisle, 99A-0143; 89002465240

1996, $3,375.00 Tax, $843.75 Penalty, Delinquent

$851.25 Penalty, Demand

Action: Deny the petition for rehearing.

Lowell E. Hoxie, 99A-0419; 17199

1993, $30,750.00 Tax, $6,150.00 Penalty

1994, $20,346.00 Tax, $4,069.20 Penalty

Action: Deny the petition for rehearing.

George H. Jesson, 98A-1376; 89002463350

1997, $8,378.00 Tax, $2,094.50 Late Filing Penalty

$3,637.25 Notice and Demand Penalty

Action: Deny the petition for rehearing.

Kimberly -Clark Corporation, 93R-0091, 93R-0898, 93A-1129; 89002463540

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

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

1986, $414,876.00 Claim for Refund

Action: The Board deferred consideration of this matter.

John Tomlinson, 99A-0196; 89002165650

1995, $1,832.00 Tax, $458.00 Penalty Delinquent Penalty

$458.00 Penalty Demand Penalty

Action: Deny the petition for rehearing.

The Pillsbury Company, 98A-1358; 89002464970

1986, $ 99,465.00 Assessment

1987, $1,039,047.00 Assessment

Action: The Board deferred consideration of this matter.

Ronald Family Trust, 98R-1327; 89002458770

1990, $ 50,453.00 Claim for Refund

1991, $510,120.00 Claim for Refund

Action: Deny the petition for rehearing.

John P. Sortor, 99A-0006; 8900245350

1996, $11,045.00 Tax, $5,522.50 Penalty

Action: Deny the petition for rehearing.

Mark A. Staples, 29992

1998, $2,465.00 Claim for Refund

Action: Deny the petition for rehearing.

SALES AND USE TAX MATTERS, CONSENT

With respect to the Sales and Use Tax Matters Consent Agenda,

upon a single motion of Mr. Chiang, seconded by Mr. Parrish and unanimously carried, Mr. Andal, Mr. Parrish, Mr. Chiang and Ms. Mandel voting yes, Mr. Klehs absent, the Board made the following orders:

Renaissance Publishing Company, Inc., SC OHA 097-531649; 32580

1-1-91 to 12-31-98, $126,261.48

Action: Redetermine as recommended by staff.

Marriott Distribution Services Inc., SR Y OHB 099-791764; 61725

1997, $163,605.22

Action: Redetermine as recommended by staff.

M & T Construction Spec., Inc., SR S EA 024-744565; 89000454790

7-1-94 to 12-31-96, $103,970.46

Action: Redetermine as recommended by staff.

DA Boat Inc., SB G UT 082-662724; 75241

May 13, 1996, $132,000.00

Action: Redetermine as recommended by staff.

Earl William Simning, SR JH 097-508196; 27863

5-1-94 to 6-30-97, $56,760.00

Action: Redetermine as recommended by staff.

Dana Corporation, SC OHB 099-440049; 18591

4-1-95 to 3-31-98, $59,909.04

Action: Redetermine as recommended by staff.

Staples Contract & Commercial Inc., SR Z OHB 097-162235; 80117

January 2000, $78,370.92 Penalty

Action: Grant relief from the penalties as recommended by staff.

SALES AND USE TAX MATTERS CREDITS, CANCELLATIONS, AND REFUNDS, CONSENT

With respect to the Sales and Use Tax Matters Credits, Cancellations, and

Refunds, Consent Agenda, upon a single motion of Mr. Parrish, seconded by Mr. Chiang and unanimously carried, Mr. Andal, Mr. Parrish, Mr. Chiang and Ms. Mandel voting yes, Mr. Klehs absent, the Board made the following orders:

Chang Yoon Moon, SR AC 011-762078; 82594

1-1-99 to 9-30-99, $106,380.36

Action: Approve the credit and cancellation as recommended by staff.

Children's Hospital of Los Angeles, SR AS 011-110074; 36977

1-1-95 to 12-31-97, $73,891.46 Tax, $27,054.84 Interest - Claim for Refund

Action: Approve the credit and cancellation as recommended by staff

Packard Bell Electronics, Inc., SR KH 013-809167; 82326

1-1-98 to 3-31-99, $134,704.61

Action: Approve the refund as recommended by staff.

Packard-Bell Electronics Inc., SR KN 013-809167; 82326

1-1-98 to 3-31-99, $134,704.61

Action: Approve the refund as recommended by staff.

Milliken & Company, SR Z OHB 014-612761; 89000105680

9-5-94 to 6-15-97, $54,776.13

Action: Approve the refund as recommended by staff.

Ralph's Grocery Company, SR Y AA 014-743151; 63135

10-11-99 to 1-30-00, $55,534.88

Action: Approve the refund as recommended by staff.

Creative Litho, SR BHA 020-639000; 47412

10-1-96 to 12-31-99, $50,558.77

Action: Approve the refund as recommended by staff.

Teepak, SR S OHA 030-617474; 37771

7-1-96 to 9-30-99, $136,791.34

Action: Approve the refund as recommended by staff.

Mercedes-Benz USA, Inc., SR Z OHB 030-648426; 80185

10-1-95 to 12-31-98, $71,392.25

Action: Approve the refund as recommended by staff.

GTE Directories Corporation, SR AA 030-659664; 63139

10-1-99 to 12-31-99, $419,308.08

Action: Approve the refund as recommended by staff.

Frankfurt Balkind West, Inc., SC OHB 030-683964

4-1-95 to 6-30-98, $514,804.29

Action: Approve the refund as recommended by staff.

Ortho McNeil Pharmaceutical, Inc., SC OHB 030-688869; 79481

10-1-95 to 12-31-98, $66,703.41

Action: Approve the refund as recommended by staff.

Johnson Controls Battery Group, Inc., SR OHA 030-698657; 63137

1-1-99 to 12-31-99, $83,456.28

Action: Approve the refund as recommended by staff.

Thorsen's Inc., SR S KHE 041-622035; 47594

1-1-97 to 12-31-99, $212,026.56

Action: Approve the refund as recommended by staff.

Interwave Communications, Inc., SR BHA 099-822580; 89002405610

7-1-96 to 6-30-99, $276,178.64

Action: Approve the refund as recommended by staff.

SPECIAL TAXES MATTERS, CONSENT

With respect to the Special Taxes Matters, Consent Agenda, upon a single

motion of Mr. Chiang, seconded by Mr. Parrish and unanimously carried, Mr. Andal, Mr. Parrish, Mr. Chiang and Ms. Mandel voting yes, Mr. Klehs absent, Ms. Mandel not participating in Navigators Insurance Company, IT ET 034-003119; 27227 the Board made the following orders:

Navigators Insurance Company, IT ET 034-003119; 27227 CF

1997, $57,812.99

Action: Approve the redetermination as recommended by staff. Ms. Mandel not participating.

Pacific Bell, TU ET 035-100018; 89000904410

10-1-87 to 9-30-91, $5,651,094.36

Action: Approve the redetermination as recommended by staff.

SPECIAL TAXES MATTERS CREDITS, CANCELLATIONS, AND REFUNDS, CONSENT

With respect to the Special Taxes Matters Credits, Cancellations, and

Refunds, Consent Agenda, upon a single motion of Mr. Chiang, seconded by Mr. Parrish and unanimously carried, Mr. Andal, Mr. Parrish, Mr. Chiang and Ms. Mandel voting yes, Mr. Klehs absent, Ms. Mandel not participating in Atlantic Richfield Compnay, MD MT 007-000812; 89000005760; 5770; 5820; 5840; 5870; 5880, Tower Energy Group, MD MT 007-001519;60850 and Equitable Variable Life Ins. Co., IT ET034-002153; 59102, the Board made the following orders:

Atlantic Richfield Company, MD MT 007-000812; 89000005760

5/98 & 6/98, $467,944.79

Action: Approve the refund as recommended by staff. Ms. Mandel not participating in accordance with Government Code Section 7.9.

Atlantic Richfield Company, MD MT 007-000812; 89000005770

12/97 & 1/98, $427,871.13

Action: Approve the refund as recommended by staff. Ms. Mandel not participating in accordance with Government Code Section 7.9.

Atlantic Richfield Company, MD MT 007-000812; 89000005820

9/96, $153,045.90

Action: Approve the refund as recommended by staff. Ms. Mandel not participating in accordance with Government Section Code 7.9.

Atlantic Richfield Company, MD MT 007-000812; 89000005840

11/96, $98,390.37

Action: Approve the refund as recommended by staff. Ms. Mandel not participating in accordance with Government Section Code 7.9.

Atlantic Richfield Company, MD MT 007-000812; 89000005870

10/97, $211,581.66

Action: Approve the refund as recommended by staff. Ms. Mandel not participating in accordance with Government Section Code 7.9.

Atlantic Richfield Company, MD MT 007-000812; 89000005880

3/98, $210,959.93

Action: Approve the refund as recommended by staff. Ms. Mandel not participating in accordance with Government Section Code 7.9.

Tower Energy Group, MD MT 007-001519; 60850

05/08/00, $443,941.94

Action: Approve the refund as recommended by staff. Ms. Mandel not participating in accordance with Government Section Code 7.9.

City of Sacramento, DG MT 057-425037; 89000971430

07/24/97, $221,793.46

Action: Approve the refund as recommended by staff.

City of Pasadena, DG MT 057-425485; 82071

08/07/00, $58,446.59

Action: Approve the refund as recommended by staff.

Equitable Variable Life Insurance Company, IT ET 034-002153; 59102

1995, 1996, $282,583.85

Action: Approve the refund as recommended by Staff. Ms. Mandel not participating in accordance with Government Section Code 7.9.

Jetro Lov, Inc., CR ET 002-001632; 80358

08/03/00, $64,217.41

Action: Approve the refund as recommended by staff.

PROPERTY TAX MATTERS, CONSENT

With respect to the Property Taxes Matter, Consent Agenda dated September 14, 2000 (Exhibit 9.14), upon motion of Mr. Chiang, seconded by Mr. Parrish and unanimously carried, Mr. Andal, Mr. Parrish and Mr. Chiang voting yes, Ms. Mandel not participating in accordance with Government Code Section 7.9, Mr. Klehs absent, the Board made the following orders:

Southern California Water Company (101) SAU 00-063; 76470

$326,100,000.00

Action: Grant petition for reassessment reducing its 2000 unitary value from $334,900,000.00 to $326,100,000.00.

San Diego Gas & Electric Company (141), SAU 00-014; 67038

$1,986,700,000.00

Action: Grant petition for reassessment reducing its 2000 unitary value from $2,143,000,000.00 to $1,986,700,000.00

Southern California Edison Company (148), SAU 00-004; 67004

$8,760,600,000.00

Action: Grant petition for reassessment reducing its 2000 unitary value from $8,965,400,000.00 to $8,760,600,000.00

Southern California Gas Company (149), SAU 00-013; 67037

$2,624,000,000.00

Action: Grant petition for reassessment reducing its 2000 unitary value from $2,765,000,000.00 to $2,624,000,000.00

Mojave Pipeline Company (187), SAU 00-074; 76908

$116,600,000.00

Action: Grant petition for reassessment reducing its 2000 unitary value from $124,700,000.00 to $116,600,000.00.

Standard Pacific Gas Line, Inc. (189), SAU 00-020; 75861

$20,328,800.00

Action: Grant petition for reassessment reducing its 2000 unitary value from $21,100,000.00 to $20,328,800.00.

The Ponderosa Telephone Company (205), SAU 00-070; 76477

$27,300,000.00

Action: Grant petition for reassessment reducing its 2000 unitary value from $27,500,000.00 to $27,300,000.00.

Ducor Telephone Company (228), SAU 00-052; 76457

$6,760,000.00

Action: Grant petition for reassessment reducing its 2000 unitary value from $6,880,000.00 to $6,760,000.00.

Evans Telephone Company (229), SAU 00-060; 76467

$6,690,000.00

Action: Grant petition for reassessment reducing its 2000 unitary value from $6,910,000.00 to $6,690,000.00.

Foresthill Telephone Company (235), SAU 00-059; 76466

$3,920,000.00

Action: Grant petition for reassessment reducing its 2000 unitary value from $4,220,000.00 to $3,920,000.00.

Hornitos Telephone Company (240), SAU 00-065; 76472

$1,390,000.00

Action: Grant petition for reassessment reducing its 2000 unitary value from $1,460,000.00 to $ $1,390,000.00.

Happy Valley Telephone Company (240), SAU 00-058, 76465

$4,670,000.00

Action: Grant petition for reassessment reducing its 2000 unitary value from $4,810,000.00 to $4,670,000.00

Kernan Telephone Company (246), SAU 00-055, 76461

$4,760,000.00

Action: Grant petition for reassessment reducing its 2000 unitary value from $4,930,000.00 to $4,760,000.00

Citizens Telecommunications Company of the Golden State (270), SAU 00-051; 76456

$20,200,000.00

Action: Grant petition for reassessment reducing its 2000 unitary value from $21,200,000.00 to $20,200,000.00.

Citizens Telecommunications Company of California (284), SAU 00-069; 76476

$180,500,000.00

Action: Grant petition for reassessment reducing its 2000 unitary value from $191,800,000.00 to $180,500,000.00

Sierra Telephone Company (286), SAU 00-066; 76473

$45,600,000.00

Action: Grant petition for reassessment reducing its 2000 unitary value from $48,400,000.00 to $45,600,000.00.

Roseville Telephone Company (294), SAU 00-067, 76474

$173,300,000.00

Action: Grant petition for reassessment reducing its 2000 unitary value from $183,586,363.00 to $173,300,000.00

The Siskiyou Telephone Company (301), SAU 00-068; 76475

$15,100,000.00

Action: Grant petition for reassessment reducing its 2000 unitary value from $15,300,000.00 to $15,100,000.00.

Citizens Telecommunications Company of Tuolumne (311), SAU 00-050; 76455

$9,620,000.00

Action: Grant petition for reassessment reducing its 2000 unitary value from $10,400,000.00 to $9,620,000.00.

GTE West Coast Incorporated (320), SAU 00-049; 76454

$15,800,000.00

Action: Grant petition for reassessment reducing its 2000 unitary value from $18,400,000.00 to $15,800,000.00

The Volcano Company (327), SAU 00-046; 76431

$27,300,000.00

Action: Grant petition for reassessment reducing its 2000 unitary value from $28,100,000.00 to $27,300,000.00.

The Cal-Ore Telephone Company (328), SAU 00-071; 76478

$4,920,000.00

Action: Grant petition for reassessment reducing its 2000 unitary value from $5,030,000.00 to $4,920,000.00.

Winterhaven Telephone Company (330), SAU 00-061; 76468

$2,510,000.00

Action: Grant petition for reassessment reducing its 2000 unitary value from $2,570,000.00 to $2,510,000.00.

Calaveras Telephone Company (210) SAU 00-008; 67017

$6,550,000.00

Action: Grant the petition for reassessment reducing its 2000 unitary value from $6,710,000.00 to $6,550,000.00 and the penalty be abated.

A.S. Telecommunications, Inc. (7502), SAU 00-047; 76432

$62,4000.00/$6,240.00 penalty

Action: Grant the petition for abatement on 2000 unitary value.

Helvey Com., Inc. (7809), SAU 00-043; 76406

$5,980,000.00/$598,000.00 penalty

Action: Grant the petition for abatement on 2000 unitary value.

Star Telecommunications, Inc. (7820), SAU 00-048; 76433

$21,400,000.00/$2,140,000.00 penalty

Action: Grant the petition for abatement on 2000 unitary value.

PROPERTY TAX MATTERS - NOT SUBJECT TO CONTRIBUTION DISCLOSURE STATUTE

With respect to the Property Taxes Matter, Not Subject to Contribution Disclosure Statute Agenda dated September 14, 2000 (Exhibit 9.15), upon motion of Mr. Chiang, seconded by Mr. Parrish and unanimously carried, Mr. Andal, Mr. Parrish and Mr. Chiang voting yes, Ms. Mandel not participating in accordance with Government Code Section 7.9, Mr. Klehs absent, the Board made the following orders:

UNITARY ASSESSMENTS

Viatel, Inc., 7662

$376,000.00 Value, $37,600.00 Penalty

Action: Adopt the Unitary Assessments and penalties as recommended by staff.

UBN, 7839

$7,620,000.00 Value, $762,000.00 Penalty

Action: Adopt the Unitary Assessments and penalties as recommended by staff.

Nexstar Communications, 7840

$351,000.00 Value, $35,100.00 Penalty

Action: Adopt the Unitary Assessments and penalties as recommended by staff.

Nexstar Communications, 7840

$509,000.00 Value, $50,900.00 Penalty

Action: Adopt the Unitary Assessments and penalties as recommended by staff.

MFS Intelenet of California, Inc. (2468)

1996, $26,500,000.00 Escaped Assessment, $2,650,000.00 Penalty

Action: Adopt the audit adjustments and penalties as recommended by staff.

LDI Solutions, Inc. (7771)

1999, ($500,000.00) Escaped Assessment, ($125,000.00) Penalty

Action: Adopt audit adjustments and penalties as recommended by staff.

net.world, inc. (7784)

1999, $422,000.00 Escaped Assessment, $42,200.00 Penalty

Action: Adopt audit adjustments and penalties as recommended by staff.

Mountain Utilities (185)

$160,000.00

Action: Adopt the Unitary Escaped Assessments as recommended by staff.

Incomnet Communications Corporation (2415)

$2,125,430.00

Action: Adopt the Unitary Escaped Assessments as recommended by staff.

AT&T Wireless Services of California, Inc.(2606)

$13,436,340.00

Action: Adopt the Unitary Escaped Assessments as recommended by staff.

Madera Radio Dispatch, Inc. (3362)

$214,600.00

Action: Adopt the Unitary Escaped Assessments as recommended by staff.

Cal-Autofone (3369)

$114,380.00

Action: Adopt the Unitary Escaped Assessments as recommended by staff.

BOARD ROLL CHANGES

Action: Upon motion of Mr. Chiang, seconded by Mr. Parrish and unanimously carried, Mr. Andal, Mr. Parrish and Mr. Chiang voting yes, Ms. Mandel not participating in accordance with Government Code Section 7.9, Mr. Klehs absent, the Board adopted the 1999 State-Assessed Property Rolls dated August 22, 2000. A copy of the roll changes is incorporated in these minutes by reference (Exhibit 9.16).

TAXPAYER BILL OF RIGHTS REIMBURSEMENT CLAIM

John Dicker, SR BH 99 357281; 57720

TBR Claim No. 00-001-B

2-8-00, $1,424.50 Reimbursement Claim

For Claimant: John Dicker

For Sales and Use Tax Department:Warren Astleford, Counsel

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

Issue:Whether the position taken by the Department on claimant's petition for redetermination was justified and reasonable.

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

FRANCHISE AND INCOME TAXES HEARINGS

Douglas and Judith Clemetson, 98A-0462; 89002466860

1989, $195,741.00 Assessment

1990, $181,748.00 Assessment

For Appellant: No Appearance

For Franchise Tax Board: Ken Kinyon, Counsel

Issue:Whether appellants have met their burden of proof to substantiate their claim to having become residents of Nevada in September of 1989.

Action: The Board took no action.

Ryan T. and Iva K. Bonar, 31057

1994, $11,878.00 Assessment, $5,336.35 Penalty

1995, $ 68.00 Assessment, $ 83.60 Penalty

1996, $ 361.00 Assessment, $ 72.20 Penalty

For Appellant: Appearance Waived

For Franchise Tax Board: Terry Collins, Supervising Tax Counsel

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

Issues:Whether respondent properly calculated appellants' taxable income.

Whether the appellants have shown that delinquent return and accuracy-related penalties should be relieved.

Whether interest should be abated.

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

Joann and Jack D. Pine, 97A-1158, 89002467270

1991, $118,529.00 Assessment, $53,338.05 Penalty

1992, $ 279.00 Assessment, $ 69.75 Penalty

For Appellant:Frederick James Weil, Attorney

Jack D. Pine

For Franchise Tax Board:Jack Stilwell, Tax Counsel

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

Issues:Whether the Exchange Agreement (Agreement) executed by appellant and Mr. Lewis Westlake (Westlake) served to transfer ownership of the real property at issue herein, and thus qualify the transaction under Internal Revenue Code (IRC) Section 1031.

Whether the delinquent filing penalties are in error.

Whether the accuracy-related understatement penalty for 1991 should be withdrawn.

Appellant's Exhibit:Declarations (Exhibit 9.17)

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

The Board recessed at 12:15 and reconvened at 1:30 with Mr. Andal,

Mr. Parrish, Mr. Klehs, Mr. Chiang and Ms. Mandel present.

Dennis and Brooks Holt, 34792

1989, $214,085.00 Assessment

1990, $ 11,471.00 Assessment

1992. $273,593.00 Assessment

1993, $449,247.00 Assessment

1994, $253,569.00 Assessment

Daniel and Mary Ann Miller, 36516

1989, $26,761.00 Assessment

1990, $ 1,434.00 Assessment

1992, $30,408.00 Assessment

1993, $49,202.00 Assessment

For Appellant: No Appearance

For Franchise Tax Board: Ann Hoover, Tax Counsel

Issue:Whether appellants have shown that in a transaction, structured as loan funds transferred to appellants from a wholly-owned subchapter S corporation and then from appellants to a second wholly-owned subchapter S corporation, constituted an "actual economic outlay" by appellants, thereby increasing appellants' basis in the borrowing subchapter S corporation sufficient to deduct losses incurred by the S corporation on their personal income tax returns.

Action: The Board took no action.

Russ H. Ostler, 47994

1995, $1,204.00 Assessment

For Appellant: Russ H. Ostler

For Franchise Tax Board: Jean Cramer, Tax Counsel

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

Issue:Whether appellant has shown that respondent's assessment is incorrect.

Appellant's Exhibit:Letters (Exhibit 9.18)

Respondent's Exhibit:Statement - Income Tax Change (Exhibit 9.19)

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

Thomas & Betts Corporation, 32822

1987, $18,361.00 Assessment

1988, $47,817.00 Assessment

1988, $ 1,981.00 Assessment

1989, $35,191.00 Assessment

1990, $ 2,076.00 Assessment

For Appellant: Joseph Warren, Vice President

Ronald Schrotenboer, Attorney

For Franchise Tax Board: David Gemmingen, Tax Counsel

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

Issue:Whether appellant has shown that certain payments received from the British government and from a wholly-owned foreign subsidiary are properly characterized as non-taxable dividends for California franchise tax purposes.

Appellant's Exhibit: Explanation of ACT Payments (Exhibit 9.20)

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

FINAL ACTION ON APPEALS HEARD SEPTEMBER 14, 2000

Upon motion of Mr. Chiang, seconded by Ms. Mandel and unanimously carried, Mr. Andal, Mr. Parrish, Mr. Chiang and Ms. Mandel voting yes, Mr. Klehs absent, the Board ordered that the claim of John Dicker, SR BH 99 357281; 57720; TBR Claim No. 00-001-B, be denied.

The Board deferred consideration of the appeal of Joann and Jack D. Pine, 97A-1158, 89002467270, to the next November Board meeting.

Upon motion of Mr. Chiang, seconded by Ms. Mandel and unanimously carried, Mr. Andal, Mr. Parrish, Mr. Chiang and Ms. Mandel voting yes, Mr. Klehs absent, the Board ordered that the appeal of Russ H. Ostler, 47994, be denied.

Upon motion of Mr. Parrish, seconded by Mr. Andal and duly carried,

Mr. Andal, Mr. Parrish and Mr. Chiang voting yes, Ms. Mandel voting no, Mr. Klehs absent, the Board ordered that the appeal of Thomas & Betts Corporation, 32822, be granted.

PROPERTY TAX HEARINGS

Extelcom, Inc. (2063), EAU 99-004; 47696

1995, $1,000,000.00 Escape Value

1996, $1,050,000.00 Escape Value

1997, $1,160,000.00 Escape Value

1998, $ 510,000.00 Escape Value

For Petitioner: Waived Appearance
For Property Taxes Department: Robert Lambert, Counsel

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

Issue:Whether or not the board staff properly reclassified the petitioner's auto-dialers as Customer Premise Equipment (CPE)?

Whether or not the "one-time" or installation fees paid by the petitioner to local exchange carriers (LECs) in order to connect to the LEC's systems were properly capitalized as installation costs?

Action:Upon motion of Mr. Parrish, seconded by Mr. Chiang and unanimously carried, Mr. Andal, Mr. Parrish and Mr. Chiang voting yes, Mr. Klehs absent, Ms. Mandel not participating in accordance with Government Code Section 7.9, the Board ordered that the petition be redetermined as recommended by Staff.

Focal Communications Corporation of California (7759) SAU 00-039; 76152

2000, $15,700,000.00

For Petitioner: Waived Appearance
For Property Taxes Department: Mary Ann Alonzo, Counsel

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

Issues:Whether the Board should abate the penalty imposed pursuant to Revenue and Taxation Code Section 830 because Petitioner made a good faith attempt to comply with time filing requirements.

Whether the Board-adopted value improperly includes the value of exempt application software.

Whether the value attributed to Construction Work in Process should be reduced for the value of switch for which partial payment has been made but has not yet been received by Petitioner.

Whether the assessment of the value of Petitioner's collocation fees for leased office space results in double taxation of the leased property.

Whether the value of the optic fiber leases should be reduced to reflect underutilized portions of fiber and fiber not in service on the lien date.

Action: Upon motion of Mr. Parrish, seconded by Mr. Chiang and unanimously carried, Mr. Andal, Mr. Parrish and Mr. Chiang voting yes, Mr. Klehs absent, Ms. Mandel not participating in accordance with Government Code Section 7.9, the Board ordered that the petition be redetermined as recommended by Staff.

The Board adjourned at 2:10 p.m.

The foregoing minutes are adopted by the Board on January 4, 2001.