BEFORE THE CALIFORNIA STATE BOARD OF EQUALIZATION 450 N Street, Room 121 Sacramento, California REPORTER'S TRANSCRIPT MARCH 17, 2009 ITEM B1 MARLENE D. CANTER (CONTINUED FINAL ACTION FROM MARCH 16, 2009) Reported by: Beverly D. Toms No. CSR 1662 1 1 2 P R E S E N T 3 4 For the Board Betty Yee of Equalization: Chair 5 Judy Chu 6 Vice-Chair 7 Bill Leonard Member 8 Michelle Steel 9 Member 10 Marcy Jo Mandel Appearing for John 11 Chiang, State Controller (per Government Code 12 Section 7.9) 13 Diane Olson Chief, Board 14 Proceedings Division 15 Board of Equalization 16 Staff: Amy Kelly Appeals Division 17 Lou Ambrose 18 Appeals Division 19 ---oOo--- 20 21 22 23 24 25 26 27 28 2 1 Sacramento, California 2 March 17, 2009 3 ---oOO--- 4 MS. OLSON: Good morning, Madam Chair and 5 Members. Our first item on the agenda is B1, Marlene D. 6 Canter. And this is a final action left over from 7 yesterday. 8 MS. YEE: Okay. Appeals, I think we had you go 9 back to look at putting something together -- 10 MS. KELLY: Yes. 11 MS. YEE: -- relative to the motion that was on 12 the table yesterday. 13 MS. KELLY: Good morning, Madam Chairwoman, 14 Members of the Board. We have just distributed a 15 schedule that is Appellant's Exhibit E from yesterday, 16 modified to match the motion yesterday, which was to 17 remove the payments to key officers and allow the -- the 18 costs of sale, the banker's fees of 900,000. 19 And that's identified as item B1 in the upper 20 right-hand corner. 21 MS. YEE: Okay. It looks like we just have a 22 deferred gain and interest effect for the 1998 year 23 because the deferred gain is less than 5 million in the 24 subsequent year. 25 MS. KELLY: Right. That's according to the 26 information we have available at this time. Now, of 27 course when FTB does the calculations the numbers may 28 not match up exactly. Although they may very well. 3 1 But I think -- the key is for the Board Members 2 to vote on the motion on the issues. And then let FTB 3 do the calculation, which may be close to this or the 4 same. But then if Appellant disagrees with it, she can 5 of course come back on a petition for rehearing if 6 there's some discrepancy on the numbers. 7 MS. YEE: Okay. So we could actually entertain 8 the motion subject to verification of these figures by 9 the Franchise Tax Board. 10 MS. KELLY: Exactly. 11 MS. YEE: Okay. All right. Questions or 12 comments, Members? 13 Let me just ask, at least -- oh, Ms. Mandel. 14 MS. MANDEL: No, I -- 15 MR. LEONARD: I -- I need someone to walk me 16 through it. How do you -- how do you subtract 55 17 percent and it's zero? 18 MS. MANDEL: That -- I think that they did this 19 for the motion that they had yesterday. 20 MR. LEONARD: Well -- but you're not 21 subtracting 55 percent. 22 MS. KELLY: Right. This is modified. This is 23 Appellant's exhibit modified to match the motion 24 yesterday. 25 MR. LEONARD: Okay. So, you used 26 Appellant's -- 27 MS. KELLY: Exhibit E. 28 MR. LEONARD: -- description but you used 4 1 the -- the numbers from the motion yesterday? 2 MS. KELLY: Yes. 3 MR. LEONARD: Gotcha. 4 MS. YEE: Okay. So, we start out with the fair 5 market value of the 29.5 million and less the payments 6 to Mr. Canter -- or, actually, the -- less the payment 7 to the key officers, I guess. And then -- 8 MR. AMBROSE: The second line there. That's 9 just payments on the obligation. So in '98 they haven't 10 received anything yet. 11 MS. YEE: Okay. Gotcha. 12 And on the banker's fees, is that -- was that 13 the only selling expense that had not been -- 14 MS. KELLY: That and also the payments to Lee 15 Canter are allowed. 16 MS. YEE: Okay, right. 17 MS. KELLY: That's ten percent of the fair 18 market value. It's about 2.9 million. 19 MS. YEE: That's right, okay. Okay. 20 Other questions or comments? 21 MR. LEONARD: I just -- just a comment that 22 the -- well, I still think it's not an installment sale. 23 If you were to do it this way, it seems to me that FTB 24 hasn't proven its side because this -- this is their tax 25 return, basically -- that the payments to the executives 26 were somehow her profit. 27 By the agreement that's been testified to she 28 had no discretion. She had no control of the money. It 5 1 doesn't even sound like she earned a day's worth of 2 interest on it. It was simply wield through her the 3 executives per all these agreements and in that sense I 4 don't -- financially I don't see the difference from a 5 tax perspective between that and the payments to 6 Mr. Canter. 7 The key officers have an obligation to report 8 that as income. So, the -- the tax obligation moves to 9 them as they get this money. And I'm not sure why 10 it's -- it's taxed twice as it -- as it goes through 11 this -- this chain. 12 I don't -- because she did it a different way 13 than FTB is now saying she should have done it. I 14 suppose if she knew years ago that they would have it 15 treated this way she would have had Sylvan simply write 16 checks directly to these executives. It would have been 17 irrelevant between all the parties, I would think, 18 knowing -- if they knew today what they knew then. And 19 since they didn't, this way was determined to be an 20 appropriate way and -- and tax returns were filed 21 consistent with that that would have resulted in her not 22 paying a tax on money she never -- never had real 23 possession of and the tax obligation going down the line 24 to those that actually had the benefit of the money. 25 So, I -- in terms of this chart, that's the one 26 big comment I have. 27 MS. MANDEL: But that -- I think there's sort 28 of two things, too. As you -- as came out in the 6 1 hearing, FTB did not change the original reporting which 2 as I listened is sort of the justification for not 3 deducting from the key officers, and the taxpayer did 4 put in an exhibit about how had installment sale 5 treatment been used on the original return, which FTB 6 didn't change, how that would be -- would have been 7 reflected. 8 And also the purpose of 453A is to sort of 9 recognize the interest element that -- from not taking 10 an obligation into income in the first year. You know, 11 electing out of installment sale. And if she'd 12 elected -- if she treated it as an installment sale and 13 had elected out of installment sale, she would have 14 taken her interest in the note at fair market value. 15 You know, what -- what was this sort of worth to her. 16 Because as the years go on, she would be 17 getting -- however she gets it, she would -- she would 18 be getting the tax benefit of the payout to the 19 executives. So, it would seem that in trying to 20 recognize this transaction for 453A purposes you'd need 21 to recognize that up front, as well. And if the 22 disconnect is because the FTB failed to -- to adjust the 23 transaction, itself, to an installment sale basis, 24 there's information in the record to be able to do that 25 and the NPA is at a certain -- for each year is at a 26 certain level of tax -- additional tax that FTB says is 27 owed from their perspective as a result of making the 28 453A adjustment the way they did it. 7 1 And that sort of limits the amount of tax that 2 FTB could collect from her because of the Statute of 3 Limitations. But -- 4 MR. AMBROSE: Uh-huh. 5 MS. MANDEL: -- it's not -- I don't know that 6 it's limited to the 453A issue. And if it is, then 7 maybe yeah, FTB just should have made the other 8 adjustment and they didn't make the other adjustment to 9 treat it on an installment sale basis. 10 But the key officers, if -- you know, if she 11 were to -- if you're trying to recognize through the 12 interest computation what her tax payment, ultimate sort 13 of tax liability, how much is she deferring, she would 14 have got the benefit of those adjustments in the future 15 in any event. 16 So, it seems like they should be taken into 17 account up front on the 453A. Did I just confuse you? 18 MR. LEONARD: Do you agree with me or not? 19 MS. MANDEL: Well, I -- I agree about the 20 officers and the remaining question that I have is 21 whether to make it match up -- whether we should 22 recognize the transaction, itself, on the installment 23 basis, because that's not how it was reported. 24 But it is also not an adjustment that FTB made. 25 MR. AMBROSE: So, as though the Appellant had 26 never reported it not on an installment basis, is that 27 what you're saying? That -- 28 MS. MANDEL: Right, because what I was hearing 8 1 was, oh, well, you know, you can't deduct the 55 percent 2 because she -- she -- she deducted the payout on her -- 3 on her Schedule E. But that's because she didn't 4 initially treat it as an installment sale. 5 MR. AMBROSE: Right. Yeah. 6 MS. MANDEL: She treated it the other, you 7 know -- but I don't -- I don't agree with what's on this 8 paper. 9 MR. LEONARD: Well, you've raised an 10 interesting point that in our search for justice do 11 we -- do we -- can we rewrite the entire tax return even 12 though part of it wasn't at issue before us originally? 13 I -- 14 MR. AMBROSE: That's a question for Amy. 15 MS. KELLY: The Board can make adjustments all 16 the way up to the NOA. But to the -- 17 MR. LEONARD: Right. 18 MS. KELLY: So -- 19 MR. LEONARD: That's what Ms. Mandel just said. 20 MS. KELLY: Right. 21 MR. LEONARD: But the consequence of going back 22 and -- and either allowing the expense that she expensed 23 or disallowing it now on that part of the return, which 24 was not at issue when it came before us, one, we have 25 the NOA cap to -- to deal with and then secondly since 26 we haven't -- nobody has really -- neither party has 27 briefed us on the consequences of that or the propriety 28 or impropriety of that. I'm -- 9 1 MS. KELLY: I believe FTB would be barred by 2 the Statute of Limitations. I think what's what FTB 3 said. 4 MS. MANDEL: They'd be barred -- they -- they 5 can't make an adjustment higher than -- they -- they 6 can't go above the number that's on the notices for 7 additional tax. 8 MS. KELLY: Right. 9 MS. MANDEL: So, from their perspective we're 10 barred because they're -- they think they're right on 11 the 453A issue, which is the complete amount that's on 12 the Notices of Action and the original NPAs. 13 MR. AMBROSE: Right. 14 MS. MANDEL: But if -- if the Board overall 15 doesn't sound inclined to go to where the FTB is on 16 453A, I don't know if that leaves -- what that leaves 17 for -- I don't know what room that leaves but, you know, 18 in the -- in the end if it's -- if FTB is stuck with the 19 number on the -- on the Notice of Action, that's -- you 20 know, that's their problem. At some level. 21 They didn't -- they didn't do -- and I don't 22 know to what extent they can do alternative, but they 23 didn't -- and -- and maybe they left -- maybe they 24 didn't make the adjustment because they thought it -- I 25 mean, either they just sort of missed it as an 26 adjustment because they were so hung up on doing 453A 27 or -- or overall the tax impact isn't that much. 28 I don't know. 10 1 MR. AMBROSE: Yeah. 2 MS. MANDEL: They didn't make the adjustment. 3 But what I heard was this is a mix and match so we're 4 not going to deduct it for the Officers. I think 5 that -- on the fair market value. I think the officers 6 should come out on the fair market value. But to get 7 rid of the mix and match, which was the big complaint, 8 then you'd make the other adjustment. 9 MS. KELLY: I believe those adjustments are 10 reflected in Exhibit E -- Appellant's Exhibit E. 11 MS. MANDEL: Well, that's -- that's the cap A 12 adjustment. With the -- 13 MR. AMBROSE: Uh-huh. 14 MS. MANDEL: Although this one differs a little 15 bit from yours with respect to the subsequent -- 16 subsequent years. 17 The Appellant's Exhibit A, the bottom half, is 18 at least as to income without the tax effect, that -- 19 reflects what they think installment sale treatment 20 would be. And as I look at it, the big difference has 21 to do with how you spread the basis -- the initial basis 22 across the years of -- of the receipts. 23 MR. AMBROSE: Right. Yeah, I agree. 24 MS. YEE: Okay. Let's see. So, Ms. Mandel, do 25 you have a alternate proposal? 26 MS. MANDEL: Well, the -- the alternate 27 proposal would be to recognize installment sale 28 treatment on the -- I'll just call it the underlying 11 1 transaction. And to -- I guess it's basically grant the 2 taxpayer on the fair market value with the Lee Canter 3 and key officer adjustments and, you know, the banker's 4 fee adjustments. 5 And of course whatever the tax impact is of 6 that, that FTB is legally limited to the amount of the 7 Notices of Action. But I don't -- I don't think it's 8 going to reach that level. 9 And if -- and if -- if there's -- I mean, 10 that's -- that's my understanding, that they can't go 11 above the NPA and that because of the way the NPAs are 12 done -- the way the NPAs are done, the 453A interest 13 adjustment is shown as other tax, which is why the 14 taxpayer referred to it as two separate taxes. There's 15 an income tax and then they reflect the cap A adjustment 16 as other tax. 17 And if there's a reason that limits the 18 adjustment to the 453A, then FTB loses out on the 19 underlying installment sale. 20 Do you follow what I'm saying, on that last 21 bit? 22 MS. KELLY: Yes. To the extent that these 23 adjustments result in a tax exceeding the NPA, then 24 that -- 25 MS. MANDEL: They can't go above the NPA. 26 MS. KELLY: Right. 27 MS. MANDEL: Or Notice of Action, and they're 28 the same numbers, right? The -- what the NPA does, 12 1 which is the one that really lists it out, is it has tax 2 which is the -- the basic income tax and then it has tax 3 from the -- you know, tax table, right? 4 Then it has "other tax" which in this year I'm 5 looking at is 2000, it shows $80,000 and change. That's 6 the 453A adjustment. And then it shows total tax. 7 Because it adds those two together and then less the 8 tax, you know, on the return, the original tax -- to get 9 to an additional tax, which is the amount that FTB is 10 asserting, which is again the 80,000 figure. 11 So, they can't go above the $80,000 figure. 12 And they would know whether -- the way this is 13 structured, if they're limited to the cap A adjustment, 14 that they can't recover through that 80,000 this other 15 underlying adjustment. 16 My instinct is that they could, but -- because 17 that's the total amount of the NPA and the Notice of 18 Action, that they owe an additional tax -- 19 MR. AMBROSE: Uh-huh. 20 MS. MANDEL: -- according to FTB, of 80,000. 21 But the complaint that -- that -- I was hearing about 22 the 55 percent and the big complaint from FTB was, oh, 23 they already took the deduction. And that's easy to 24 fix. You should have put them on an installment sale 25 basis. You didn't do that. You pretended that it was 26 and then you hit them with 453A. 27 MR. AMBROSE: Uh-huh. 28 MS. MANDEL: And if we're in the 453A world, 13 1 then put her on the installment sale basis. But you 2 have a limit. And I think it will be -- I mean, 3 presumably it will be less than the amounts because 4 the -- the cap A itself is going to come down 5 significantly with -- 6 MR. AMBROSE: Right, with the adjustment. 7 MS. MANDEL: -- with the adjustment on the cap 8 A. 9 MR. AMBROSE: Yeah. 10 MS. YEE: Okay. Do you want to phrase a 11 motion, Ms. Mandel? 12 MS. MANDEL: It would be to put the original 13 reporting of the transaction on the installment sale 14 method, which I understand is reflected in taxpayer's 15 Exhibit A from the hearing, and to grant the taxpayer's 16 appeal as to use of fair market value, including the 17 deductions both as to -- the deductions both as to -- if 18 we're calling them deductions, the -- both as to Lee 19 Canter and as to the executive officers, and recognizing 20 that FTB is limited to the additional tax amount that 21 they've proposed except as the -- can I say except as to 22 how -- how do I get that other piece in there? 23 MR. AMBROSE: So the total tax liability 24 wouldn't exceed -- 25 MS. MANDEL: The total tax liability cannot 26 exceed the NPA, but if there's something that I'm not 27 aware of that limits them to -- limits that total tax 28 liability to the 453A piece only, then that's the only 14 1 piece they can get. 2 MR. AMBROSE: So -- I didn't understand that 3 last part. 4 MS. MANDEL: Well, that last part has to do 5 with how they do their notices. I mean, I've not seen 6 one with the 453A -- you know, the general rule is 7 because of the Statute of Limitations that FTB is 8 limited to the -- getting the tax amount that's on the 9 NPA. 10 So, the additional tax amount. So that if -- 11 if something we did came up to a higher number than 12 that, you can't -- you know, they absolutely can't go 13 higher and they know that. 14 MR. AMBROSE: Uh-huh. 15 MS. MANDEL: The question with the cap A is the 16 way that the notices come out, they leave the tax -- 17 they didn't make any -- well, they might have made some 18 other changes, I don't know, in the audit that were, you 19 know, not a problem. But there's a basic tax amount and 20 then there's the other tax, which is the cap A, because 21 it's -- it's an addition to tax. It's not the 22 underlying -- it's not the income tax. It's an addition 23 to tax. 24 It's shown on a separate line on the NPA as 25 other tax. But the bottom line of the NPA is -- is the 26 deficiency amount. 27 MR. AMBROSE: Right. 28 MS. MANDEL: Because the regular income tax and 15 1 the 453A addition to tax are added together and then 2 you -- you subtract what they've already paid to find 3 out what do they owe. 4 MR. AMBROSE: Right. 5 MS. MANDEL: And it happens in this case that 6 what do they -- what they owe, according to FTB, for 7 each year happens to be the amount of the cap A addition 8 to tax. 9 The piece that -- and so, under the general 10 rules that we're all familiar with, they can't go higher 11 than that figure. 12 MR. AMBROSE: Well, they know that less what 13 they paid reporting not on the installment method where 14 they took the deduction for the salary. 15 MS. MANDEL: That's already -- that's 16 already -- 17 MR. AMBROSE: Right. Right. 18 MS. MANDEL: That's already in there. The 19 80 -- the -- the total amount that FTB is seeking from 20 them is -- you know, the deficiency in each year happens 21 to be the same amount as the cap A interest addition to 22 tax. 23 Under all the general rules we always see, 24 they -- FTB -- no matter what happens through the 25 system, FTB cannot get more money, higher deficiency. 26 If they discovered something and said, you know what, if 27 you make this change instead of 80,000 in that year 28 she'd owe 100,000 -- they can't get the 100,000 or the 16 1 extra 20. They could only get the 80 under all the 2 general rules. 3 MR. AMBROSE: And you're just saying there 4 might be something out there? 5 MS. MANDEL: I don't know if there's something 6 special and weird about -- 7 MR. AMBROSE: Okay. 8 MS. MANDEL: -- in addition to tax. You know, 9 we're usually dealing with just the bottom line number 10 and it's totally the tax, the regular tax. 11 MR. AMBROSE: Uh-huh. 12 MS. MANDEL: I don't know if there's something 13 about the addition to tax and the way the NPAs are done 14 that would mean that they can only get up to that amount 15 in cap A addition to tax. 16 MR. AMBROSE: Oh, okay. 17 MS. MANDEL: And -- and that none of that even 18 if we made an adjustment could -- could -- so we make an 19 adjustment on the cap A, that takes the number down. 20 Let's just say it took it down to -- I don't know, 21 50,000. I don't know what it does. But let's just say 22 it takes it down to 50,000 in a year where the bottom 23 line of the NPA was 80. 30,000 differential, could FTB 24 recover any of that if we make an adjustment for putting 25 it on the installment sale basis, the underlying 26 transaction. 27 Under our normal way of thinking of these 28 things, the answer is yes. If there's an increase in 17 1 the underlying tax, because the total deficiency was 80 2 now reduced on the one issue to 50, that -- that there's 3 room for FTB to get, you know, another bid. 4 I don't know if there's something peculiar 5 about -- I don't think there is, but I don't know. 6 MR. AMBROSE: Uh-huh. 7 MS. MANDEL: And I wouldn't want the 8 taxpayer -- you know, wouldn't -- wouldn't want the 9 taxpayer to have to pay more than the cap A adjustment 10 if FTB is otherwise precluded because of that way of the 11 NPA and the separate tax amounts. If the FTB is 12 otherwise precluded from getting more. 13 MR. AMBROSE: Okay. 14 MS. YEE: Okay. We have a motion on the table 15 to reflect the reporting in this matter on an 16 installment basis, to rule in favor of Appellant with 17 respect to reflecting the fair market value of the sale 18 with the payments to Lee Canter and the key officers 19 included, and then also subject to the limits of what 20 the FTB's NPAs allow for on both the tax and the 453A. 21 DR. CHU: Now, what -- what happened to the 22 motion that we had yesterday? Was that expunged or 23 what? 24 MS. YEE: The motion we had yesterday was 25 actually, I think -- 26 MS. MANDEL: It's still there. 27 MS. YEE: -- withdrawn from -- to bring this 28 particular schedule back. 18 1 DR. CHU: I -- I'm not sure that it was 2 actually withdrawn, though. 3 MS. OLSON: This -- Marcy's would just be a 4 substitute motion -- 5 MS. YEE: Well, okay, I'm sorry. 6 MS. OLSON: -- at this time. 7 MS. YEE: Okay. 8 MS. OLSON: That's okay. 9 MS. STEEL: Can I -- I got fair market value 10 and then, you know, Mr. Lee Canter is deduction plus the 11 officers. But what's another one that I just couldn't 12 understand that -- you know, what's that -- the other 13 part? 14 MS. KELLY: The bank fees? 15 MS. STEEL: Yeah. 16 MS. MANDEL: The banker's fees. 17 MS. KELLY: That's 900,000, costs of sale. 18 MS. STEEL: So it's going to be add? 19 MS. KELLY: That's the third thing that would 20 be -- 21 MR. AMBROSE: Deducted. 22 MS. YEE: Deducted. 23 MS. STEEL: -- more about -- deducted. 24 Okay. 25 MS. KELLY: Madam Chairwoman -- 26 MS. YEE: Yes. 27 MS. KELLY: Can we clarify the fair market 28 value amount for this motion? 19 1 MS. YEE: For the substitute motion? 2 MS. KELLY: Yes. 3 MS. YEE: Ms. Mandel, I think, are you assuming 4 the 29.5 million? 5 MS. MANDEL: Yeah, you're still starting with 6 the 29, that was the -- 7 MS. YEE: Okay. 8 MS. MANDEL: -- that was the -- 9 MS. KELLY: Okay. 10 MS. MANDEL: -- taxpayer's starting number. 11 MS. KELLY: Okay, thank you. 12 MS. MANDEL: And then you're deducting the 13 percentages. 14 MS. YEE: Okay. We have a motion on the table. 15 Is there a second on the motion? 16 MR. LEONARD: I'll -- I'll second it so I can 17 ask a question. 18 MS. YEE: Okay. Yeah, thank you. I just want 19 to have it seconded so we can have discussion on this. 20 Mr. Leonard. 21 MR. LEONARD: I'm having trouble with math 22 here. If -- if we reduce her installment sale 23 obligation by 65 percent, which I think is a consequence 24 of the -- well, relative to yesterday I guess is reduce 25 it by 55 percent, but consequences now total 65 percent 26 reduction, how -- how is it possible that FTB might be 27 able to charge as much tax by reversing the expense? 28 MS. MANDEL: I don't -- I don't think it's 20 1 going to come out to anywhere near as much tax. 2 MR. LEONARD: Well, you scare me when you talk 3 that way. 4 MS. MANDEL: Well, because I don't have tax 5 numbers in front of me. What I have in front of me 6 from -- 7 MR. LEONARD: Should we do tax -- 8 MS. MANDEL: -- the taxpayer's Exhibit E is -- 9 is that it takes the -- the fair market value, once you 10 take all -- once you take those deductions, they have 11 ten million and something as a fair market value. 12 And this -- this schedule I don't think has the 13 900,000 in it. You take out the threshold and apply the 14 percentage under, you know, those gnarly 453A rules that 15 we've heard about so many times, and then you apply the 16 tax rate on the -- on the deferred gain. 17 And then their Schedule A, which doesn't take 18 it down to tax amount. So, their schedule -- I mean, 19 their -- not their Schedule A, I'm sorry. 20 MR. LEONARD: This table. 21 MS. MANDEL: -- their Exhibit A -- 22 MR. LEONARD: Okay. 23 MS. MANDEL: -- is their installment sale 24 income. If -- if they had reported it on the 25 installment sale basis, and the big difference is that 26 the -- the -- the -- is the way that they've prorated 27 the cost basis. 28 MR. LEONARD: Madam Chair, is there a way that 21 1 we can get an answer to Ms. Mandel's question before we 2 vote? 3 MS. YEE: Well, actually, what I was -- 4 MS. KELLY: Yes. 5 MS. YEE: -- going to propose is I'd like to 6 put this over. I think we're kind of speculating 7 without seeing all the numbers in front of us. 8 I understand Ms. Mandel's motion. Let's have 9 it reflected because I do think -- I'd like to see kind 10 of what this all looks like when we have Ms. Mandel's 11 full motion incorporated, so that the reporting is 12 reflected on installment basis. We have the discount 13 from the fair market value for the payments to 14 Mr. Canter, to the key officers, the banker's fees. And 15 I don't know -- and if we could get a handle on, you 16 know, what the amounts were on the Notice of Assessment, 17 so that we kind of know what our parameters are. 18 MS. KELLY: Uh-huh. One option would be to ask 19 the parties to do this serially. We could ask FTB to 20 run the calculation within 15 days. Say, ask the 21 parties to comment on it and then have it come back 22 before the Board. That way we'd have a fairly solid 23 number and we would know if there's any disagreement. 24 And we can ask FTB about the effect on the Notice of 25 Action on the -- under these particular circumstances. 26 MS. YEE: I -- I don't have any objection to 27 that. I think that actually might be helpful. But let 28 me add one other thing, if I could. 22 1 The motion from yesterday, I'd like to see that 2 flushed out -- 3 MS. KELLY: We could do the same thing. 4 MS. YEE: -- with the same thing. 5 MS. KELLY: Yes. We could do both alternative 6 scenarios. 7 MS. YEE: I would like to see that. 8 MS. KELLY: Okay. 9 MS. YEE: I think that will help us both get an 10 understanding with respect to the effect on the tax side 11 as well as on the 453A side. And have that brought back 12 to our next Sacramento meeting. 13 MS. KELLY: Let's -- is there time for that? 14 MS. YEE: Is that possible? 15 MS. OLSON: April 15th, yes. 16 MS. KELLY: April 15th. 17 MS. OLSON: Uh-huh. 18 MS. KELLY: April 15th. 19 MS. YEE: Is there enough time? 20 MS. KELLY: I believe so. 21 MS. OLSON: We can -- let's -- let's just say 22 we can put it on the agenda. We can 15th. 23 MS. KELLY: I think so, yeah. And then -- 24 MS. OLSON: Okay. 25 MS. YEE: Let's see what the parties can do. 26 If possible, back on the 15th. 27 MS. KELLY: On the next calendar, okay. 28 MS. YEE: And then let us know if you need 23 1 additional time. 2 MS. KELLY: Okay, thank you. 3 MS. YEE: But -- so, are we clear on the two 4 approaches reflected in the different motions -- 5 MS. KELLY: Yes. 6 MS. YEE: -- the one from yesterday and the one 7 today? 8 MS. KELLY: Do you have any questions on the 9 second one? 10 MR. AMBROSE: On the second motion? 11 MS. KELLY: The second motion. 12 MR. AMBROSE: No. No, I'm clear on it. 13 MS. YEE: Okay. 14 MS. OLSON: You're going to do it concurrently? 15 Time. 16 MS. KELLY: Oh, no, no, no, we're going to do 17 serially. 15 to FTB. 15 to Appellant. And then to 18 Appeals. 19 MR. AMBROSE: Serially or simultaneously? 20 MS. KELLY: I was thinking serially. FTB first 21 and then get Appellant's comment on it. That way we 22 know if there's a disagreement. 23 MR. AMBROSE: And that would be 30 days, total? 24 MS. KELLY: Yes. 25 MS. OLSON: Yeah. 26 MR. AMBROSE: Oh, okay. 27 MS. OLSON: Then -- we -- we don't have 30 days 28 between them. 24 1 MS. KELLY: Oh, no. So giving, so -- 2 MS. MANDEL: Give them ten. 3 MS. YEE: Yeah, I think we can shorten the 4 time. I mean, the -- the numbers are there. 5 MS. KELLY: Yeah, we can just shorten the time. 6 This is just a matter of running the calculations. 7 MS. YEE: Exactly. 8 MS. MANDEL: Running the calculations. 9 MS. OLSON: Okay. 10 MS. YEE: Exactly. 11 MS. MANDEL: That's -- that's what I was seeing 12 today. I -- I have a question on another case from 13 yesterday, Amy. 14 MS. YEE: Okay. Let's dispense with this. So, 15 without objection, Members, we will postpone this to the 16 next Sacramento meeting pending the presentation of more 17 complete schedules based on the motion from today and 18 the motion from yesterday. 19 MS. KELLY: Okay. 20 MS. YEE: Okay. Thank you. 21 ---oOo--- 22 23 24 25 26 27 28 25 1 REPORTER'S CERTIFICATE. 2 3 State of California ) 4 ) ss 5 County of Sacramento ) 6 7 I, BEVERLY D. TOMS, Hearing Reporter for the 8 California State Board of Equalization certify that on 9 March 17, 2009 I recorded verbatim, in shorthand, to the 10 best of my ability, the proceedings in the 11 above-entitled hearing; that I transcribed the shorthand 12 writing into typewriting; and that the preceding 25 13 pages constitute a complete and accurate transcription 14 of the shorthand writing. 15 16 Dated: April 2, 2009. 17 18 19 20 ____________________________ 21 BEVERLY D. TOMS 22 Hearing Reporter 23 24 25 26 27 28 26