Approved Minutes - Thursday, December 14, 2000

The Board met at its offices at 450 N Street, Sacramento, at 9:35 a.m. with Chairman Andal and Mr. Chiang present, Ms. Mandel present on behalf of Dr. Connell in accordance with Government Code Section 7.9.

ANNOUNCEMENT OF CLOSED SESSION

The Board went immediately into closed session with Mr. Andal, Mr. Parrish, Mr. Klehs, Mr. Chiang and Ms. Mandel 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 9:36 a.m. and reconvened at 9:45 a.m. in open session with Mr. Andal, Mr. Parrish, Mr. Klehs, Mr. Chiang and Ms. Mandel present.

ADMINISTRATIVE MATTERS, CONSENT

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

Action: Adopt the following resolution (Exhibit 12.24) extending its best wishes on their respective retirements and its appreciation for their service to the Board and the State of California.

Steven "Greg" Karlbert, Business Taxes Representative, Torrance District Office; Data L. Goldsbery, Tax Technician III, Account Analysis and Control Section, Headquarters, Robert F. Kamnikar, Business Taxes Administrator I, San Jose District Office; Robert E. Pieroni, Supervising Tax Auditor II, Centralized Review Section; Erma Deaton, Tax Technician III, Account Analysis and Control Section; Janet Fitzpatrick, Associate Information Systems Analyst, Technology Service Division;

Action: Approve the Board Hearing minutes of August 29, 30, 31, 2000.

Action: Approve the recommendations in Ms. Frost's report (Exhibit 12.25).

Laurie Frost, Chief, Agency Planning and Research Division, reported that Section 130105(c) of the Health and Safety Code, as added by Proposition 10, requires the Board to determine the effect of Proposition 10 on the consumption of cigarettes and tobacco products. It also directs that a transfer of funds to Proposition 99 and Breast Cancer programs be made to "backfill" for revenue losses to those programs resulting from consumption changes triggered by Proposition 10.

Exhibits to these Minutes are incorporated by reference.

BUSINESS TAXES COMMITTEE REPORT

Ramon J. Hirsig, Deputy Director, Sales and Use Tax Department, presented the Business Taxes Committee Report, the only open item was Regulation 1620, Interstate and Foreign Commerce (Exhibit 12.26).

Mr. Andal moved to accept Industry's version of amendment to regulation 1620. The motion was seconded by Mr. Chiang but failed to carry, Mr. Andal and Mr. Chiang voting yes, Mr. Klehs and Mr. Parrish voting no, Ms. Mandel not participating.

Mr. Andal moved to approve staff's recommendation regarding Regulation 1620. The motion was seconded by Mr. Parrish but failed to carry, Mr. Andal and Mr. Parrish voting yes, Mr. Klehs and Mr. Chiang voting no, Ms. Mandel not participating.

The Board deferred approval of the Business Taxes Committee Report until later in the day.

PROPERTY TAX COMMITTEE REPORT

Richard Johnson, Deputy Director, Property Taxes Department, presented the Property Tax Committee Report (Exhibit 12.27).

Upon motion of Mr. Andal, seconded by Mr. Parrish and unanimously carried, Mr. Andal, Mr. Parrish, Mr. Klehs, and Mr. Chiang voting yes, Ms. Mandel abstaining, the Board approved the property tax committee meeting minutes as submitted but voted on agenda item no. 2 to adopt alternative no. 1 on Issue Paper 00-048.

CHIEF COUNSEL MATTERS, RULEMAKING

Upon motion of Ms. Mandel, seconded by Mr. Parrish and unanimously carried, Mr. Andal, Mr. Parrish, Mr. Klehs, Mr. Chiang and Ms. Mandel voting yes, the Board approved the proposed Section 100 changes to Regulation 1532, Teleproduction or Other Postproduction Service Equipment (Exhibit 12.28).

Upon motion of Ms. Mandel, seconded by Mr. Parrish and unanimously carried, Mr. Andal, Mr. Parrish, Mr. Klehs, Mr. Chiang and Ms. Mandel voting yes, the Board approved the proposed Section 100 changes to Rule 308.6, Application for Equalization by Member, Alternate Member, or Hearing Officer (Exhibit 12.29).

CHIEF COUNSEL MATTERS, STATE ASSESSEE PETITIONS - FINDINGS AND DECISIONS

Upon motion of Mr. Parrish, seconded by Mr. Andal and unanimously carried, Mr. Andal, Mr. Parrish and Mr. Chiang voting yes, Mr. Klehs and Ms. Mandel not participating, the Board approved the following (Exhibit 12.30):

San Diego Gas & Electric Co. (141) SAU 00-014, 67038
Action: Adopted findings and decision in the 2000 petition for reassessment of unitary value.

Southern California Edison Co. (148) SAU 00-004
Action: Adopted findings and decision in the 2000 petition for reassessment of unitary value.

Southern California Gas Company (149) SAU 00-013
Action: Adopted findings and decision in the 2000 petition for reassessment of unitary value.

Southern California Gas Company (149) SAN 00-001, 83764
Action: Adopted findings and decision in the 2000 petition for reassessment of nonunitary value.

Standard Pacific Gas Line, Inc. (189) SAU 00-020
Action: Adopted findings and decision in the 2000 petition for reassessment of unitary value.

CHIEF COUNSEL MATTER, TAXPAYERS' BILL OF RIGHTS REIMBURSEMENT CLAIM

Inquiry Handling Service, SY AC 13-657298, 57745
8-13-97 to 10-18-99, $6,695.61

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

Action: Upon motion of Mr. Andal, seconded by Mr. Parrish and unanimously carried, Mr. Andal, Mr. Parrish, Mr. Klehs, Mr. Chiang and Ms. Mandel voting yes, the Board denied the claim for reimbursement (Exhibit 12.31).

LEGAL APPEALS MATTERS, ADJUDICATORY

WFS Financial, Inc., SR EAA 52-009479; 56535
1-1-96 to 11-29-99, $28,099.00

Considered by the Board: Memorandum Opinion

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

Action: Upon motion of Mr. Andal, seconded by Ms. Mandel and duly carried, Mr. Andal, Mr. Chiang and Ms. Mandel voting yes, Mr. Klehs voting no, Mr. Parrish not participating, the Board adopted the Memorandum Opinion (Exhibit 12.32).

Issa Tooma & Muna R. Salomi, SR FH 25-927443-010; 89000635060

10-1-92 to 9-30-95, $46,376.43 Tax, $4,740.03 Penalty, Negligence

Considered by the Board: October 3, 2000, San Diego

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

Action: The Board deferred consideration of this matter.

Enterprise Rent-A-Car Company of Sacramento, SY KH 30-689296; 89000870190
7-1-94 to 6-30-97, $28,099.00 Tax

Considered by the Board: February 23, 2000, Sacramento

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

Action: Upon motion of Mr. Andal, seconded by Ms. Mandel and unanimously carried, Mr. Andal, Mr. Chiang and Ms. Mandel voting yes, Mr. Klehs abstaining, Mr. Parrish not participating, the Board ordered that the petition be redetermined as recommended by Appeals Section.

Mr. Parrish stated for the record he would like to correct his vote in the petition of WFS Financial, Inc., SR EAA 52-009479; 56535, to voting yes, adopting the Memorandum Opinion.

Yosemite Falls, Inc., SR DH 99-577429-010; 89002315130
4-1-95 to 12-31-97, $5,195.94 Tax; $519.61 Penalty, Negligence

Considered by the Board: June 15, 2000, Sacramento

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

Ms. Mandel left the Boardroom. Dr. Connell entered the Boardroom.

Action: Upon motion of Mr. Andal, seconded by Mr. Parrish and duly carried, Mr. Andal, Mr. Parrish and Dr. Connell voting yes, Mr. Klehs and Mr. Chiang voting no, the Board ordered that the granted the petition for rehearing.

FRANCHISE AND INCOME TAX MATTERS, ADJUDICATORY

John & Kathryn Taylor, 98A-0989; 89002465960
1991, $31,109.00 Tax, $7,697.75 Penalty

Considered by the Board: July 26, 2000, Sacramento

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

Action: Upon motion of Mr. Andal, seconded by Mr. Parrish and duly carried, Mr. Andal, Mr. Parrish, Mr. Chiang and Dr. Connell voting yes, Mr. Klehs voting no, the Board adopted a decision denying the petition for rehearing.

At 10:00 a.m. Judy Newton, Chief, Board Proceeding Division, announced the adjournment of the Board meeting to convene a Special Meeting of the Board of Equalization.

SPECIAL MEETING

The Board met at its offices at 450 N Street, Sacramento, at 10:00 a.m. with Chairman Andal, Vice Chairman Parrish, Mr. Klehs, Mr. Chiang and Dr. Connell present.

FINDING TO PROTECT THE PUBLIC INTEREST

Dr. Connell moved that the Board make the following finding required by Government Section Code 11125.4. The State Board of Equalization finds immediate action is required to protect the public interest. The potential harm to the public arises from an arbitration award of $88.5 million in attorney's fees in the case of Anna Jordan and Mark Glickman vs. State of California, Smog Impact Fees, which would be paid from public funds with possible detriment to the citizens of this state. The motion was seconded by Mr. Andal and unanimously carried, Mr. Andal, Mr. Parrish, Mr. Klehs, Mr. Chiang and Dr. Connell voting yes.

ANNOUNCEMENT OF CLOSED SESSION

The Board went into closed session with Mr. Andal, Mr. Parrish, Mr. Klehs, Mr. Chiang and Dr. Connell present.

CLOSED SESSION

The Board met to discuss pending litigation.

The Board recessed at 10:05 a.m. and reconvened at 10:45 a.m. in open session with Mr. Andal, Mr. Parrish, Mr. Klehs, Mr. Chiang and Dr. Connell present.

Mr. Andal reported that during the closed session Dr. Connell made a motion, which the Board approved unanimously. Mr. Andal requested Dr. Connell to read the motion.

Dr. Connell stated for the record that the Board of Equalization authorizes the filing by the Attorney General of an Application for Correction of the Award with the arbitration panel.

The Board adjourned the Special Meeting at 10:55 a.m.

The Board met at its offices at 450 N Street, Sacramento, at 11:00 a.m. with Chairman Andal, Vice Chairman Parrish, Mr. Klehs, Mr. Chiang and Dr. Connell present.

PROPERTY TAX MATTERS, CONSENT

With respect to the Property Taxes Matter, Consent Agenda dated December 13, 2000 (Exhibit 12.33), upon a single motion of Dr. Connell, seconded by Mr. Andal and unanimously carried, Mr. Andal, Mr. Parrish, Mr. Klehs and Dr. Connell voting yes, Mr. Chiang not participating, the Board made the following orders:

Union Pacific Railroad Co. (843), SAN 00-002, 83777
$494,812,680.00

Action: Granted petition for reassessment reducing its 2000 nonunitary value from $510,327,803.00 to $494,812,680.00.

Pacific Pipeline System LLC (486), SAU 00-062, 76469
$238,600,000.00

Action: Granted petition for reassessment reducing its 2000 unitary value from $299,600,000.00 to $238,600,000.00.

Broadwing Communications Services, Inc. (7630), SAU 00-030, 76078
$82,400,000.00

Action: Granted petition for reassessment reducing its 2000 unitary value from $103,100,000.00 to $82,400,000.00.

Williams Communications, Inc. (7819), SAU 00-037, 76146
$62,000,000.00

Action: Granted petition for reassessment reducing its 2000 unitary value from $87,000,000.00 to $62,000,000.00.

Mr. Klehs left the Boardroom.

PROPERTY TAXES MATTERS, ADJUDICATORY

Qwest Communications, (2463), SAU 00-001, 63580
2000, $207,200,000.00

Considered by the Board: November 28, 2000

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

Action: Upon motion of Dr. Connell, seconded by Mr. Parrish and unanimously carried, Mr. Andal, Mr. Parrish and Dr. Connell voting yes, Mr. Chiang not participating, Mr. Klehs absent, the Board adopted the staff recommendation to increase the 2000 unitary value to $57,500,000.00.

Mr. Klehs entered the Boardroom.

LEGAL APPEALS MATTERS, CONSENT

The Board deferred consideration of the following matters: Michael Alan Morales, SR DHH 99-208531-010; 89002148370, T.A.H.C., Inc., SR KHE 22-746216-010; 89000371490, Melvin L. Carter, SR KH 97-092280-010; 89002054730, Ietje Signorita Duncan, SR KHA 97-272932; 37887, S.D. Engineering, Inc., SS FH 25-830290-010, -020, -030, -040;89000578520, -540, -550, -570, and Stephen L. Young & Clifford Jones, SR KH 28-705418-030; 89000748970.

With respect to the Legal Appeals Matters Consent Agenda, upon a single motion of Mr. Klehs, seconded by Mr. Parrish and unanimously carried, Mr. Andal, Mr. Parrish, Mr. Klehs, Mr. Chiang and Dr. Connell voting yes, the Board made the following orders:

Farhad & Moiz Kaboud, SR AS 11-697090-010; 89000018260
7-1-95 to 9-30-97, $5,668.36 Tax

Considered by the Board: Hearing Notice Sent - No Response

Action: Redetermine as recommended by Appeals Section.

Thomas W. Coburn, SR GHC 15-662067-010; 89000140660
7-1-91 to 6-30-94, $00.00 Tax

Considered by the Board: Hearing Notice Sent - No Response

Action: Redetermine as recommended by Appeals Section.

Michael Alan Morales, SR DHH 99-208531-010; 89002148370
10-1-94 to 12-31-97, $3,282.82 Tax

Considered by the Board: Hearing Notice Sent - No Response

Action: The Board deferred consideration of this matter.

Hotel Information Systems, Inc., SR CHB 21-759113-010; 89000326810
4-1-94 to 8-9-96, $9,030.54 Tax

Considered by the Board: Hearing Notice Sent - No Response

Action: Redetermine as recommended by Appeals Section.

M & R Market & Liquor, Inc., SR AS 99-695307-010; 89002362260
1-1-91 to 6-30-94, $92,349.87 Tax, $23,087.47 Penalty

Considered by the Board: Hearing Notice Sent - No Response

Action: Redetermine as recommended by Appeals Section.

Charter Equipment Leasing Corporation, SR OH 99-697949-020, -030;
89002363540, -550

First Portland Leasing Corporation, SC OH 99-697605-010, -020, -030;
89002363260, -270, -280

First Portland Leasing Corporation, SC OH 99-697647-020; 89002363330
1-1-87 to 12-31-94, $257,697.81 Tax, $13,650.11 Penalty, Negligence

Considered by the Board: Hearing Notice Sent - No Response

Action: Redetermine as recommended by Appeals Section.

T.A.H.C., Inc., SR KHE 22-746216-010; 89000371490
10-1-94 to 9-30-97, $1,968.59 Tax

Considered by the Board: Hearing Notice Sent - No Response

Action: The Board deferred consideration of this matter.

California Business Furnishings, Inc., SR ARF 22-763573-010; 89000374140
10-1-94 to 9-30-97, $417.73 Tax

Considered by the Board: Hearing Notice Sent - No Response

Action: Redetermine as recommended by Appeals Section.

Russ Derek Johnson, SR DH 22-845042-010; 89000394510
1-1-95 to 3-31-95, $00.00 Tax, $00.00 Penalty

Considered by the Board: Hearing Notice Sent - No Response

Action: Redetermine as recommended by Appeals Section.

GTE Cellular Communications Corporation, SS OHC 24-806753-010; 89000464760
1-1-92 to 12-31-94, $129,497.81 Tax, $18,007.69 Penalty, Negligence

Considered by the Board: Hearing Notice Sent - No Response

Action: Redetermine as recommended by Appeals Section.

The Upsilon Corporation, SY EAA 24-913858-010; 89000489420
1-1-95 to 12-31-97, $11,782.45 Tax

Considered by the Board: Hearing Notice Sent - No Response

Action: Redetermine as recommended by Appeals Section.

Contract & Leisure Seating, Inc., SN OHB 52-006684-010; 890009661410
1-1-93 to 3-31-98, $34,777.62 Tax, $3,468.38 Penalty, Failure to File

Considered by the Board: Hearing Notice Sent - No Response

Action: Redetermine as recommended by Appeals Section.

Melvin L. Carter, SR KH 97-092280-010; 89002054730
1-1-91 to 3-31-97, $116,725.98 Tax, $29,315.44 Penalty, Fraud

Considered by the Board: Hearing Notice Sent - No Response

Action: The Board deferred consideration of this matter.

American Environmental Systems, Inc., SC OH 97-146474-010; 89002065640
10-1-90 to 9-30-97, $4,163.37 Tax, 400.00 Penalty

Considered by the Board: Hearing Notice Sent - No Response

Action: Redetermine as recommended by Appeals Section.

CABC, Inc., SY BH 97-204713-010; 89002075310
10-1-97 to 12-31-97, $9,287.00 Tax, $928.70 Penalty, Failure to Timely Pay

Considered by the Board: Hearing Notice Sent - No Response

Action: Deny the petition for reconsideration.

Ietje Signorita Duncan, SR KHA 97-272932; 37887
1-1-96 to 6-30-98, $4,250.00 Tax

Considered by the Board: Hearing Notice Sent - No Response

Action: The Board deferred consideration of this matter.

Medi-Scan Systems, SR GH 26-774602-010; 89000669700
1-1-94 to 12-31-96, $13,074.01 Tax

Considered by the Board: Hearing Notice Sent - Appearance Waived

Action: Redetermine as recommended by Appeals Section.

Jackson Dawson Communications, Inc., SS OHA 30-671735; 89000848880
1-1-94 to 12-31-96, $21,730.29 Claim for Refund

Considered by the Board: Hearing Notice Sent - Appearance Waived

Action: Grant the claim for refund in the amount of $11,686.04 and the remainder of the claim for refund be denied.

Specialty Crushing, Inc., SR CH 99-315023-010; 89002196280
4-1-94 to 3-31-97, $49,327.59 Tax

Considered by the Board: Hearing Notice Sent - Appearance Waived

Action: Redetermine as recommended by Appeals Section.

Paper, Pulp & Film, Inc., SR ARF 99-762609-010; 17169
1-1-95 to 6-30-98, $00.00 Tax

Considered by the Board: Hearing Request Withdrawn

Action: Redetermine as recommended by Appeals Section.

Trailer World Inc., SR FH17-621922-010; 89000195010
1-1-93 to 6-30-96, $00.00 Tax, $00.00 Penalty

Considered by the Board: Hearing Request Withdrawn

Action: Redetermine as recommended by Appeals Section.

S.D. Engineering, Inc., SS FH 25-830290-010, -020, -030, -040;
89000578520, -540, -550, -570

4-1-87 to 6-30-96, $312,792.78 Tax

Considered by the Board: Petition for Rehearing

Action: The Board deferred consideration of this matter.

Alice & Heliodoro Gutierrez, SR AC 13-834226-010; 89000086550

1-1-92 to 12-31-94, $49,500.88 Tax, $6,586.36 Penalty, Fraud

$2,315.55 Penalty, Negligence

Considered by the Board: Petition for Rehearing

Action: Deny the petition for rehearing.

Heliodoro Gutierrez, SR AC 13-848556-010; 89000089730
10-1-89 to 12-31-94, $75,056.33 Tax, $9,676.88 Penalty, Fraud

$3,634.89 Penalty, Negligence

Heliodoro Gutierrez, SR ARH 22-820125-010; 8900386850
6-1-90 to 11-17-93, $93,594.16 Tax, $17,463.34 Penalty, Fraud

$ 2,422.06 Penalty, Negligence

Considered by the Board: Petition for Rehearing

Action: Deny the petition for rehearing.

Gutierrez Restaurants, Inc., SR ARH 99-501080-010, -020, -030;
89002283450; 32159; 33091

11-18-93 to 12-31-94, $94,485.30 Tax, $22,828.72 Penalty, Fraud

$ 317.08 Penalty, Negligence

$ 9,086.47 Penalty, Finality

Considered by the Board: Petition for Rehearing

Action: Deny the petition for rehearing.

Stephen L. Young & Clifford Jones, SR KH 28-705418-030; 89000748970
10-1-93 to 6-30-95, $7,477.97 Tax

Considered by the Board: Petition for Rehearing

Action: The Board deferred consideration of this matter.

Ray's Is The Place, Inc., SR KH 97-121701-010; 89002060790
4-1-95 to 3-31-97, $7,184.73 Tax

Considered by the Board: Petition for Rehearing

Action: Deny the petition for rehearing.

Charles N Giguere, SR GH 97-046799-010; 8900204410
1-1-89 to 12-31-96, $88,899.80 Tax, $29,313.36 Penalty, Fraud

$ 9,144.51 Penalty, Failure to File

Considered by the Board: Petition for Rehearing

Action: Deny the petition for rehearing.

FRANCHISE AND INCOME TAX MATTERS, CONSENT

Action: (Motion Expunged.)

SALES AND USE TAX MATTERS, REDETERMINATION, RELIEF OF PENALTY AND DENIALS OF CLAIMS FOR REFUND, CONSENT

The Board deferred consideration of the following: Leiner Health Products, Inc., SR Y AB 030-630222; 89000818350 and Electronic Boutique America, Inc., SR Z OHB 097-258710; 91766.

With respect to the Sales and Use Tax Matters Redetermination, Relief of Penalty and Denials of Claims for Refund,Consent Agenda, upon a single motion of

Mr. Parrish, seconded by Mr. Andal and unanimously carried, Mr. Andal, Mr. Parrish,

Mr. Klehs, Mr. Chiang and Dr. Connell voting yes, Mr. Klehs not participating in Circuit City Stores, Inc., SR Y OHB 017-692815; 51567, Board made the following orders:

Himco National, Inc., SR S AS 011-647800
4-1-96 to 6-30-98, $59,543.48

Action: Redetermine as recommended by staff.

Circuit City Stores, Inc., SR Y OHB 017-692815; 51567
4-1-94 to 3-31-97, $5,236,346.40

Action: Redetermine as recommended by staff. Mr. Klehs not participating.

Applied Graphics Technology, LTD PTN, SR Y AP 017-770810; 15708
1-1-94 to 4-16-96, $281,674.75

Action: Redetermine as recommended by staff.

Co Express Imaging & Computer Graphics, SR Z OHC 021-856204; 89000347600
10-1-94 to 6-30-97, $52,228.45

Action: Redetermine as recommended by staff.

Inland Litho, Inc., SR EA 024-861266; 89000476370
4-1-94 to 3-31-97, $62,249.52

Action: Redetermine as recommended by staff.

Square D Company, SR Z OHA 030-601230; 52340
1-1-95 to 12-31-98, $258,948.22

Action: Redetermine as recommended by staff.

Leiner Health Products, Inc., SR Y AB 030-630222; 89000818350
10-1-94 to 9-30-97, $00.00

Action: The Board deferred consideration of this matter.

Mercedes-Benz Credit Corporation, SR S OHB 030-654620; 89000834390
1-1-95 to 12-31-97, $379,205.59

Action: Redetermine as recommended by staff.

Huntair, Inc., SC OH 097-115030; 29960
9-1-95 to 6-30-98, $358,620.02

Action: Redetermine as recommended by staff.

Alpha Dog, Inc., SR AA 099-108099; 879002106440
5-4-90 to 9-30-92, $197,375.87

Action: Redetermine as recommended by staff.

Partner Press, Inc., SR FH 099-767013; 28055
7-1-95 to 6-30-95, $60,833.74

Action: Redetermine as recommended by staff.

Next Level Communications, SR JH 099-792380; 30358
1-1-95 to 9-30-98, $185,216.95

Action: Redetermine as recommended by staff.

Electronics Boutique America, Inc., SR Z OHB 097-258710; 91722
10-1-98to 12-31-98, $93,115.80

Action: The Board deferred consideration of this matter.

Electronics Boutique America, Inc., SR Z OHB 097-258710; 91740
7-1-99 to 9-30-99, $56,320.90

Action: The Board deferred consideration of this matter.

Haas Factory Outlet, LLC, SR AB 097-268987; 88609
1-1-99 to 12-31-99, $64970.40

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

Williams-Sonoma Stores, LLC, SR Y BH 097-279069; 88608
4-1-00 to 4-30-00, $50,220.00

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

Main Street California, Inc., SR Y OH 099-415704; 91717
10-1-94 to 12-31-97, $92,563.10

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

Qualcomm Investment Company, Inc., SR FH 099-533032, 92399
1-1-00 to 3-31-00, $277,791.90

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

Epitaph/California Corporation, SR AS 011-807182; 89000033910
7-1-95 to 12-31-97, $116,298.82

Action: Deny of claim for refund as recommended by staff.

Zarcon Corporation, SR FH 025-829283; 51618
1-1-96 to 12-31-99, $150,000.00

Action: Deny of claim for refund as recommended by staff.

Chronical Publishing Company, SC OHA 030-686174; 89000866400
1-1-98 to 12-31-98, $91,743.00

Action: Deny of claim for refund as recommended by staff.

NCI Successor, Inc, SR FH 099-957555; 51619
1-1-96 to 12-31-99, $150,000.00

Action: Deny of claim for refund as recommended by staff.

Electronic Boutique America, Inc., SR Z OHB 097-258710; 91766
10-1-99 to 12-31-99, $101,474.50

Action: The Board deferred consideration of this matter.

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

FRANCHISE AND INCOME TAX MATTERS, CONSENT

Upon motion of Mr. Klehs, seconded by Mr. Parrish and unanimously carried, Mr. Andal, Mr. Parrish, Mr. Klehs, Mr. Chiang and Ms. Mandel voting yes, the Board ordered that its previous motion approving the Franchise Tax Matters Consent Agenda be expunged.

The Board deferred action on the following items: Ralph Brandifino, 40694, SDV (USA), Inc., 41859, Yuan Ji Su, 89002459600, Ali Tasdighi, 42972, and Leonard Jaffe, 30751.

With respect to the Franchise Tax Matters Consent Agenda, upon a single motion of Mr. Klehs, seconded by Mr. Parrish and unanimously carried, Mr. Andal, Mr. Parrish, Mr. Klehs, Mr. Chiang and Dr. Connell voting yes, Mr. Chiang not participating in Yoshinoya West, Inc., 43092, the Board made the following orders:

Estate of Michele C. Batcabe, 41971
1996, $307.00 Assessment
Action: Sustain the action of the Franchise Tax Board.

Thomas A. Bergron, Sr., 41978
1995, $164.00 Assessment
Action: Sustain the action of the Franchise Tax Board.

Ralph Brandifino, 40694
1997, $1,236.00 Tax, $309.00 Penalty
Action: The Board deferred consideration of this matter.

Walter A. Calmese, 34405
1995, $780.00 Assessment
Action: Sustain the action of the Franchise Tax Board.

Carolyn A. Dalley, 40703
1995, $485.00 Assessment
Action: Sustain the action of the Franchise Tax Board.

Emilio & Maria T. DeSoto, 41985
1995, $46.79 Claim for Refund
Action: Sustain the action of the Franchise Tax Board.

Travis B. Finch, 32614
1995, $1,422.00 Assessment
Action: Sustain the action of the Franchise Tax Board.

Eugen D. Georgescu, 32616
1987, $3,335.11 Claim for Refund
Action: Sustain the action of the Franchise Tax Board.

SDV (USA), Inc., 41859
1989, $1.00 or more Claim for Refund
1990, $1.00 or more Claim for Refund
1991, $1.00 or more Claim for Refund
Action: The Board deferred consideration of this matter.

Yuan Ji Su, 89002459600
1990, $112,281.00 Assessment, $28,070.00 Penalty
1993, $ 15,810.00 Assessment, $ 3,162.00 Penalty
1994, $ 13,610.00 Assessment, $ 2,722.00 Penalty
Action: The Board deferred consideration of this matter.

Ali Tasdighi, 42972
1993, $ 279.00 Assessment
1994, $39,764.00 Assessment
Action: The Board deferred consideration of this matter.

Maximo M. Fuentes, 98A-1367; 89002462440
1996, $9,366.00 Assessment, $4,683.00 Penalty
Action: Deny the petition for rehearing.

Luis A. Isip, 29937
1992, $1.00 or more Claim for Refund
Action: Deny the petition for rehearing.

Leonard Jaffe, 30751
1991, $12,390.00 Assessment
1992, $ 2,182.00 Assessment
Action: The Board deferred consideration in this matter.

Yoshinoya West, Inc., 43092
1986, $192,438.00 Assessment
1987, $397,287.00 Assessment
Action: Deny the petition for rehearing. Mr. Chiang not participating.

Ms. Mandel left the Boardroom. Dr. Connell entered the Boardroom.

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

The Board deferred consideration in the following matters: Westfalia Separator, Inc., SR S OHB 020-165619; 92379, Pacific Gas & Electric Company, SR Z BH 098-001535; 89002085250, and Pacific Gas & Electric Company, SR Z BH 098-001535; 49882.

With respect to the Sales and Use Tax Matters Credits, Cancellation & Refunds Consent Agenda, upon a single motion of Mr. Klehs, seconded by Mr. Chiang and unanimously carried, Mr. Andal, Mr. Parrish, Mr. Klehs, Mr. Chiang and Dr. Connell voting yes, the Board made the following orders:

Westfalia Separator, Inc., SR S OHB 020-165619; 92379
1-1-96 to 12-31-98, $57,840.59
Action: The Board deferred consideration of this matter.

USF Filtration & Separations Group, Inc., SR S OHB 030-682642; 52893
7-1-95 to 9-30-98, $1,132,859.25
Action: Approve credit and cancellation as recommended by staff.

Carlos Obriens Inc., SR Y EH 097-326407; 92447
4-1-99 to 6-30-99, $72,211.32
Action: Approve credit and cancellation as recommended by staff.

Jon Hendricks, SR CHB 099-871829; 92316
10-1-99 to 3-31-00, $53,722.57
Action: Approve credit and cancellation as recommended by staff.

Vista Ford, SR AC 013-662747; 91630
1-1-97 to 12-31-99, $69,375.93
Action: Approve the refund as recommended by staff.

Alameda Electric Supply, SR Y CHA 021-676699; 79174
7-1-99 to 9-30-99, $84,768.94
Action: Approve the refund as recommended by staff.

Hanson Aggregates Pacific Southwest, Inc., SR Z FH 025-681448; 89000526390
10-1-96 to 9-30-99, $308,373.80
Action: Approve the refund as recommended by staff.

Southern California Edison Company, SR Z AP 098-000037; 75800
10-1-99 to 12-31-99, $1,814,680.84
Action: Approve the refund as recommended by staff.

Pacific Gas & Electric Company, SR Z BH 098-001535; 89002085250
10-1-95 to 6-30-96, $1,774,777.32
Action: The Board deferred consideration of this matter.

Pacific Gas & Electric Company, SR Z BH 098-001535; 49882
10-1-96 to 12-31-98, $3,071,040.20
Action: The Board deferred consideration of this matter.

Kaiser Foundation Hospitals, SR Y CH 098-013774; 36904
7-1-96 to 12-31-96, $345,742.54
Action: Approve the refund as recommended by staff.

Kaiser Foundation Hospitals, SR Y CH 098-013774; 55726
1-1-97 to 12-31-99, $2,088,069.26
Action: Approve the refund as recommended by staff.

Vu Son Tran, SR AC 099-824817; 32959
1-1-97 to 3-31-00, $67,259.07
Action: Approve the refund as recommended by staff.

Copycare of San Diego, Inc., SR FHB 099-928473, 80160
1-1-97 to 3-31-00, $59,783.08
Action: Approve the refund as recommended by staff.

SPECIAL TAXES MATTERS, CREDITS, CANCELLATIONS & REFUNDS, CONSENT

With respect to the Special Taxes Matters Credits, Cancellations, and Refunds, Consent Agenda, upon a single motion of Dr. Connell, seconded by Mr. Parrish and unanimously carried, Mr. Andal, Mr. Parrish, Mr. Klehs, Mr. Chiang and Dr. Connell voting yes, the Board made the following orders:

WABAN, Inc., CA MT 051-018203; 89000960320
1-1-93 to 6-31-96, $62,572.36
Action: Approve the refund as recommended by staff.

Argonaut Insurance Company, IT ET 034-001523; 90985
1997, $157,412.46
Action: Approve the refund as recommended by Staff.

PROPERTY TAXES MATTERS - UNITARY ASSESSMENTS

NOT SUBJECT TO CONTRIBUTION DISCLOSURE STATUTE

With respect to Property Taxes Matters Not Subject to Contribution: Disclosure Statute Agenda, upon a single motion of Dr. Connell, seconded by Mr. Parrish and unanimously carried, Mr. Andal, Mr. Parrish, Mr. Klehs, Mr. Chiang and Dr. Connell voting yes, the Board made the following orders:

Ultimate Communications, Inc. (7841)
2000, $308,000.00 Value, $30,800.00 Penalty
Action: Adopt 2000 unitary value of $338,800.00.

Universal Information Services, Inc. (7842)
2000, $5,500.00 Value, $550.00 Penalty
Action: Adopt 2000 unitary value of $6,050.00

Telemanagement Services, Inc., (7843)
2000, $45,200.00 Value, $4,520.00 Penalty
Action: Adopt 2000 unitary value of $49,720.00

San Diego Gas & Electric Company (141)
2000, $408,000,000.00 Value, $40,800,000.00 Penalty
Action: Adopt unitary escaped assessment and abate the penalty as recommended by staff.

GTE California Incorporated (201)
1996-1999, $21,000,000.00 Escaped Assessment, $9,040,000.00 Penalty
$ 5,607,504.00 Assessment in Lieu of Interest

Action: Adopt assessed value change of $35,647,504.00.
Pacific Bell and Subsidiaries (279)
1996-1999, $448,800,000.00 Escaped Assessment, $25,625,000 Penalty
$ 66,099,000.00 Assessment in Lieu of Interest
Action: Adopt assessed value change of $540,524,000.00.

AT&T Wireless Services, Inc. (2606)
1997-1999, $34,100,000.00 Escaped Assessment, $5,170,000.00 Penalty
$ 5,370,000.00 Assessment in Lieu of Interest
Action: Adopt assessed value change of $44,640,000.00.

Santa Barbara Cellular Systems, Ltd. (2626)
1996-1999, $12,000,000.00 Escaped Assessment, $1,200,000.00 Penalty
$ 1,800,000.00 Assessment in Lieu of Interest
Action: Adopt assessed value change of $15,000,000.00.

Visalia Cellular Telephone Company (2641)
1996-1999, $4,770,000.00 Escaped Assessment, $477,000.00 Penalty
$ 853,200.00 Assessment in Lieu of Interest
Action: Adopt assessed value change of $6,100,200.00.

Redding Cellular Partnership (2639)
1996-1999, $1,620,000.00 Escaped Assessment, $195,000.00 Penalty
$ 423,000.00 Assessment in Lieu of Interest
Action: Adopt assessed value change of $2,238,000.00.

Yuba City Cellular Telephone Company (2643)
1996-1999, $1,750,000.00 Escaped Assessment, $175,000.00 Penalty
$ 288,600.00 Assessment in Lieu of Interest
Action: Adopt assessed value change of $2,213,600.00.

Data Cellular Systems, RSA #10 (2676)
1996-1999, $1,208,131.00 Escaped Assessment, $120,813.00 Penalty
$ 212,888.00 Assessment in Lieu of Interest
Action: Adopt assessed value change of $1,541,832.00.

United States Advanced Network, Inc. (7798)
2000, ($650,000.00) (Excessive) Assessment, ($65,000.00) Penalty
Action: Adopt assessed value change of ($715,000.00).

BUSINESS TAXES COMMITTEE REPORT

Ramon Hirsig, Deputy Director, Sale and Use Tax Department, reported the remaining issue in Regulation 1620, Interstate and Foreign Commerce be amended to modify the application of tax to the use of intermodal cargo containers.

Upon motion of Dr. Connell, seconded by Mr. Andal and duly carried, Mr. Andal, Mr. Chiang and Dr. Connell voting yes, Mr. Klehs and Mr. Chiang voting no, the Board authorized the publication of the regulation as proposed by industry.

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

SALES AND USE TAX MATTERS, ADJUDICATORY

AMGEN, SR AR 15-711218; 89000148950

7-1-93 to 12-31-96, $85,806.44

Considered by the Board: July 23, 1998

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

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

Mr. Klehs left the Boardroom.

FRANCHISE AND INCOME TAXES HEARINGS

Larry D. & Janet Russel, 42093

1991, $185,354.00 Assessment

1992, $ 9,804.00 Assessment

1993, $ 60,084.00 Assessment

For Appellant: Kristina Harrigan, Attorney
For Franchise Tax Board: David Gemmigan, Tax Counsel

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

Issues: Whether respondent properly determined the amount realized on appellants' partnership's sale or exchange of real property for purpose on Internal Revenue Code (IRC) Section 1001, as incorporated into California law, by including in the amount realized partnership debts that the buyer contractually agreed to pay and/or took the property subject to.

Whether a debt to appellants was wholly worthless, and therefore deductible as a non-business bad debt, in 1993.

Appellant's Exhibit: Miscellaneous Documents (Exhibit 12.35)

Action: 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 submitted the appeal for decision, granting the appellant 30 days to submit additional documentation and the Appeals Section 30 days thereafter to bring the matter back to the Board with a final recommendation.

Georgette Stepner, 99A-0094; 89002458610

1990, $133,331.00 Assessment

For Appellant: No Appearance
For Franchise Tax Board: Mark McEvilly, Tax Counsel

Action: The Board took no action.

Mark L. & Daryl R. Nelson, 57373

1995, $22,829.00 Assessment, $5,707.25 Penalty

For Appellant: Daryl R. Nelson
For Franchise Tax Board: Suzanne Small, Tax Counsel

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

Issues: Whether appellants have shown that their accountant replied to respondent's request for information in a timely manner.

Whether appellants have shown that they had "reasonable cause" for their failure to reply to respondent's demand for information in a timely manner.

Appellant's Declaration (Exhibit 12.36)

Opinion of Court (Exhibit 12.37)

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

PROPERTY TAX MATTERS, ADJUDICATORY

Global Crossing Telecommunications, Inc. (2207), SAU 00-056, 76462

2000, $44,100,000.00

Considered by the Board: November 28, 2000

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

Action: Upon motion of Mr. Andal, seconded by Mr. Parrish and unanimously carried, Mr. Andal and Mr. Parrish voting yes, and Mr. Klehs abstaining, Mr. Chiang not participating and Ms. Mandel not participating in accordance with Government Code Section 7.9, the Board adopted the staff recommendation to increase the 2000 unitary value to $57,500,000.00.

Global Crossing North American Networks, Inc. (7536), SAU00-057, 76464

2000, $55,900,000.00

Considered by the Board: November 28, 2000

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

Action: Upon motion of Mr. Andal, seconded by Mr. Parrish and unanimously carried, Mr. Andal and Mr. Parrish voting yes, Mr. Klehs abstaining, Mr. Chiang not participating, Ms. Mandel not participating in accordance with Government Code Section 7.9, the Board adopted the staff recommendation to increase the 2000 unitary value to $55,900,000.00.

2001-02 BASELINE BUDGET

James E. Speed, Executive Director, requested that the Board approve changes to the current expenditure level authorized by enactment of the 2000-01 Budget Bill (Chapter 52, Statutes of 2000).

Upon motion of Mr. Klehs, seconded by Mr. Andal, and unanimously carried, Mr. Andal, Mr. Parrish, Mr. Klehs, and Mr. Chiang, voting yes, Ms. Mandel abstaining, the Board approved the proposed baseline budget changes for 2001-02 (Exhibit 12.38) and requested that the budget be reduced by 10% in the next fiscal year.

The Board recessed at 12:10 p.m. and reconvened at 1:35 p.m. with Mr. Andal, Mr. Chiang and Ms. Mandel present.

RESOLUTION

Mr. Andal presented to Joan Armenta-Roberts, Tax Advisor, a resolution extending the Board's best wishes on her new job opportunity and its appreciation for her services to the Board and the State of California.

FRANCHISE AND INCOME TAXES HEARINGS

John Clement, 51509

1992, $3,483.53 Claim for Refund

1993, $2,883.70 Claim for Refund

1994, $ 383.49 Claim for Refund

For Appellant: John Clement
For Franchise Tax Board: Cynthia Kent, Tax Counsel

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

Issue: Whether appellant's claims for refund are barred by the applicable statute of limitations.

Appellant's Exhibit: Letters (Exhibit 12.39)

Mr. Klehs and Mr. Parrish entered the Boardroom.

Action: Upon motion of Mr. Parrish, seconded by Mr. Chiang and unanimously carried, Mr. Andal, Mr. Parrish, Mr. Klehs, Mr. Chiang and Ms. Mandel voting yes, the Board sustained the action of the Franchise Tax Board. The Board directed the Appeals Section to help the Appellant with a Board of Control claim, including a letter of support from the Board, Ms. Mandel not participating in the recommendation to the Board of Control.

Raymond & Barbara Wizbowski, 37456

1977, $6,627.06 Assessment

1978, $6,553.92 Assessment

For Appellant: Edwin P. Antonlin, Representative
Raymond Wizbowski
Barbara Wizbowski
For Franchise Tax Board: Sherman Eatmon, Tax Counsel

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

Issues: Whether an alleged overpayment for tax year 1979 may be offset against the tax liabilities for 1977 and 1978 through equitable recoupment or statutory offset.

Whether appellant filed a timely claim for refund for 1979.

Whether interest should be abated.

Appellant's Exhibit: Summary of Deductions and Gain

(Exhibit 12.40)

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

Harold G. & Lillian C. (Deceased) Harvey, 27981

1979, $3,538.00 Assessment

1982, $4,038.00 Assessment

1983, $6,520.00 Assessment

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

Action: The Board took no action.

Jim Beam Brands Company, 99A-0183; 89002468010

1987, $137,368.00 Assessment

For Appellant: Jordan M. Goodman, Attorney
Stephen Abondi, Treasurer
For Franchise Tax Board: Jon Jensen, Tax Counsel

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

Issues: Whether appellant has shown that gain from the sale of stock of one of its second-tier subsidiaries was non-business income rather than business income.

Whether appellant has shown that the gain should be included in the denominator of its sales factor if the gain was actually business income.

Whether appellant has shown that the basis of the stock of the second-tier subsidiary should be increased by the amount of the retained earnings of the subsidiary for purposes of computing gain on the sale of the stock if the gain was actually business income.

Jon Jensen, Tax Counsel, stated for the record that Franchise Tax Board conceded Issue 2.

Action: Upon motion of Mr. Andal, seconded by Mr. Parrish and unanimously carried, Mr. Andal, Mr. Parrish, Mr. Klehs, Mr. Chiang and Ms. Mandel voting yes, the Board sustained the action of the Franchise Tax Board in regards to Issue 3.

Upon motion of Mr. Andal, seconded by Mr. Parrish and unanimously carried, Mr. Andal, Mr. Parrish, Mr. Klehs, Mr. Chiang and Ms. Mandel voting yes, the Board ordered that the appeal be submitted for decision, granting the appellant 30 days for further briefing, the Franchise Tax Board 30 days to review and the Appeals Section 30 days thereafter to bring the matter back to the Board with a final recommendation.

James H. & M.B. DeCordova, 33840

1989, $12,853.00 Assessment

1990, $ 4,868.00 Assessment

For Appellant: No Appearance
For Franchise Tax Board: Suzanne Small, Tax Counsel

Action: The Board took no action.

Shakey's International, Ltd.,99R-0312; 89002469240

1986, $ 28,612.00 Claim for Refund

1987, $198,571.00 Claim for Refund

For Appellant: No Appearance
For Franchise Tax Board: Jon Jensen, Tax Counsel

Action: The Board took no action.

BUSINESS TAXES HEARINGS

National Cement Company of California, Inc., SY AC 22-786469; 89000378670

4-1-95 to 6-30-98, $200,000.00 Claim for Refund

For Petitioner: Rosemary Plue, Tax Manager
Eric J. Coffill, Attorney
For Sales and Use Tax Department: Jeffery Graybill, Counsel

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

Issues: Whether certain items of tangible personal property which claimant purchased and used in the production of cement were properly purchased for resale because the primary purpose of the property was to incorporate as a beneficial ingredient of the cement.

In the alternative, whether certain items of tangible personal property which claimant purchased and used in the production of cement were partially purchased for resale, because a "dual use" was made of the property.

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

The Board recessed at 3:25 p.m. and reconvened at 3:30 p.m. with Mr. Andal, Mr. Parrish, Mr. Klehs, Mr. Chiang and Ms. Mandel present.

FINAL ACTION HEARD ON DECEMBER 14, 2000

Upon motion of Mr. Chiang, seconded by Mr. Andal and unanimously carried, Mr. Andal, Mr. Klehs and Mr. Chiang voting yes, Mr. Parrish and Ms. Mandel abstaining, the Board ordered that the appeal of Raymond & Barbara Wizbowski, 37456, be denied.

Upon motion of Mr. Andal, seconded by Mr. Chiang and unanimously carried, Mr. Andal, Mr. Parrish, Mr. Klehs, Mr. Chiang and Ms. Mandel voting yes, the Board ordered that the petition of National Cement Company of California, Inc., SY AC 22-786469; 89000378670, be brought back before the Board at the February, Sacramento Board Hearing for a final recommendation.

FINAL ACTION HEARD ON DECEMBER 13, 2000

Upon motion of Mr. Chiang, seconded by Mr. Andal and duly carried, Mr. Andal, Mr. Parrish and Mr. Chiang voting yes, Mr. Klehs voting no and Ms. Mandel not participating, the Board ordered that the claim for refund of Stratacom, Inc., SY GH 26-773927-010, -002; 89000669540, -520, be denied.

BUSINESS TAXES HEARINGS

Shmuel Krampf & Rauven Aviv, SR CH 99-864638-010; 89002420940

7-1-92 to 6-30-95, $61,849.56 Tax, $6,262.53 Penalty, Negligence

For Petitioner: Jeff Lehrman, Attorney
For Sales and Use Tax Department: Kevin Hanks, Hearing Representative

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

Issues: Whether the understated taxable sales should have been computed based on the mark-up method as provided for in the Board's Audit Manual.

Whether the Department's one-week test, which computed cash and check sales as 53.33% of total sales, was representative.

Whether the results of petitioner's 19-month test of successor's sales, which shows that cash and check sales were 15% of total sales, warrant an adjustment to the tax.

Whether relief from the negligence penalty is warranted.

Mr. Klehs left the Boardroom.

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 submitted for decision.

Upon motion of Mr. Andal, 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 petition be denied in regards to the successor liability.

Upon motion of Mr. Andal, seconded by Mr. Parrish and duly carried, Mr. Andal, Mr. Parrish and Mr. Chiang voting yes, Ms. Mandel voting no, Mr. Klehs absent, the Board ordered the negligence penalty be deleted.

Upon motion of Mr. Andal, 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 petition be submitted for decision, granting the Department 30 days to review new documentation, the petitioner 30 days to respond and the Appeals Section 30 days thereafter to bring a final recommendation back to the Board.

Ohannes Bedros Boghossian, SR KH 27-806169-010; 89000726600

7-1-94 to 10-10-97, $9,605.13 Tax, $960.51 Penalty, Negligence

For Petitioner: No Appearance
For Sales and Use Tax Department: Kevin Hanks, Hearing Representative

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

Issues: Whether the measure of tax was established in accordance with the facts.

Whether relief from the 10% penalty for negligence is warranted.

Action: Upon motion of Mr. Andal, 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 negligence penalty be deleted; otherwise redetermined as recommended by the Appeals Section.

Matt Lababedy, SR KH 99-581458-010; 89002316680

1-1-95 to 12-31-97, $10,501.98 Tax

For Petitioner: No Appearance
For Sales and Use Tax Department: Kevin Hanks, Hearing Representative

Action: The Board took no action.

The Board adjourned at 4:15 p.m.

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