BEFORE THE CALIFORNIA STATE BOARD OF EQUALIZATION 450 N Street, Room 121 Sacramento, California REPORTER'S TRANSCRIPT JULY 21, 2009 FINAL ACTIONS 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 Steve Shea 6 Acting Member 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 Equalizaion 16 Staff: David Levine Tax Counsel IV 17 18 ---oOo--- 19 20 21 22 23 24 25 26 27 28 2 1 ITEM B1a and B1b 2 Sacramento, California 3 July 21, 2009 4 ---oOO--- 5 MS. OLSON: Our next item are final actions. 6 MS. YEE: Okay. Why don't we do that before we 7 begin closed session. 8 MS. OLSON: The first item is B2, Rochelle M. 9 Dorfler. 10 MS. YEE: Okay. Could I -- actually, Ms. 11 Olson, if I could, I was -- want to be responsive to 12 Appeals but I wanted to revisit item B1, a and b, John 13 Hugo and Linda Williams. 14 I think there was a -- we had a motion to 15 sustain the Franchise Tax Board and Appeals had raised 16 the issue of jurisdiction, particular to this case. 17 MS. KELLY: Right. 18 MS. YEE: Ms. Kelly. 19 MS. KELLY: Amy Kelly for the Appeals Division. 20 And we were requesting that we get clarification on -- 21 on the motion with respect to jurisdiction in light of 22 the Board's opinion in the appeal of Tyler Griffiths. 23 In -- in that opinion the Board held that where an 24 appeal comes to the Board where the election for relief 25 was made under "f" only, that the Board does not have 26 jurisdiction to consider the merits. 27 MS. MANDEL: And -- and that was an issue that 28 FTB also said, right? 3 1 MS. KELLY: You know, in their briefing they 2 raised the issue that they thought -- they thought there 3 was not jurisdiction. They did their briefing prior to 4 Tyler Griffiths. 5 MS. MANDEL: Tyler Griffiths. 6 MS. KELLY: But -- so, yes, they agree on that 7 issue that there is a question of jurisdiction. 8 MS. YEE: Okay. So this is -- so, this relates 9 to the fact that because Ms. Williams' request was made 10 only for the -- 11 MS. KELLY: F. 12 MS. YEE: -- subdivision "f", equitable relief 13 only -- 14 MS. KELLY: Right. Right. 15 MS. YEE: -- that we -- 16 MS. MANDEL: So -- so it would seem, though, 17 that a motion to sustain the Franchise Tax Board could 18 have been -- it was Mr. Leonard's motion, I suppose, 19 but -- 20 MR. LEONARD: Yes. 21 MS. MANDEL: -- it could have been -- you know, 22 we -- we don't have jurisdiction just like FTB says, and 23 if we did she's right anyway and FTB is right. So -- 24 MS. KELLY: That's correct. 25 MS. MANDEL: It may look -- 26 MS. KELLY: The result is the same. 27 MS. MANDEL: The result is the same. 28 MS. KELLY: Yeah. 4 1 MS. MANDEL: But it's his motion, so -- 2 MS. YEE: Mr. Leonard, do you want to -- 3 MS. MANDEL: I don't -- 4 MR. LEONARD: I'm very open. Just one 5 question, since the law has changed since then, is -- 6 are -- are taxpayers -- are spouses' rights enhanced or 7 reduced under current law? 8 I mean, how much of a precedent is this and 9 what's the effect? 10 MS. KELLY: The law has not changed. What 11 Tyler Griffiths did was interpret the statute. And 12 the -- the California statute says that in order to 13 appeal you have to have elected relief under "b" or "c", 14 which is traditional innocent spouse relief or separate 15 liability relief. 16 And if you've done that then you can appeal to 17 the Board for any appropriate relief under the section, 18 which includes equitable relief. 19 MS. MANDEL: And the Tyler Griffith follows 20 what the Tax Court, didn't -- didn't Tyler Griffith -- 21 MS. KELLY: Tyler Griffiths follows what the 22 Tax Court -- their position on jurisdiction before 23 6015 was revised. 24 MS. MANDEL: Well -- and maybe that's the 25 reference. Is that the reference, that there's been 26 some change that maybe changes the -- what the Tax 27 Court's going to do in the future or what we might do in 28 the future -- on jurisdiction, or no? 5 1 MS. KELLY: No 2 MS. MANDEL: Oh, okay. 3 MR. LEONARD: Let me ask the question slightly 4 differently. And I'm -- I'm really not opposed to the 5 suggestion. My motion was to deny jurisdiction. 6 Would Mr. Williams have had relief if he had 7 acted timely in a proper manner and under the proper 8 code sections even according to this situation? 9 MS. KELLY: Well, his relief was dependent -- 10 his appeal rights were dependent on how she requested 11 relief. However, it's a gamble. 12 For an Appellant -- for an individual who 13 requests relief from the Franchise Tax Board and they 14 request only equity relief, under Tyler Griffiths either 15 party is restricted in their appeal rights. 16 So regardless of how FTB decides whether or not 17 to grant relief, they're both restricted. 18 MS. MANDEL: So if FTB -- 19 MS. KELLY: And so it's a fair -- 20 MS. MANDEL: -- denied -- if FTB had denied her 21 instead of granting, Tyler Griffith's case would say she 22 would not have been able to come here. 23 MS. KELLY: Exactly. And -- and of course the 24 result is the same when you dismiss for lack of 25 jurisdiction here, because the effect is that FTB's 26 grant of relief to Ms. Williams will stand. 27 Now, the -- 28 MR. LEONARD: I understand that result's the 6 1 same, but it also strikes me this -- his case was 2 pathetic. He refused to show up. He wasted our time. 3 And I'm -- I'm -- I am concerned that there may be 4 another more aggrieved spouse that has a better case 5 that -- that because of this precedent may be denied 6 jurisdiction when they really should be able to come 7 before us and explain. 8 MS. KELLY: Uh-huh. 9 MR. LEONARD: That's what I'm trying to figure 10 out, anticipate future appeals. 11 MS. KELLY: Right. That's correct, that for an 12 individual who elects -- elects relief only under 13 "e" -- or under "f", the appeal rights will be 14 restricted. 15 It's equal treatment for both spouses. 16 In this particular appeal the reason why it 17 continued, as it became clear after Tyler Griffiths that 18 jurisdiction was a serious hurdle, was that there was 19 some indication that there might be jurisdiction under 20 another subdivision. And that did not work out. 21 And I'm speaking of Federal conformity, which 22 Mark McEvilly spoke about a little bit. 23 MR. LEONARD: Right. That's what I was talking 24 about, the Code section it was under. 25 MS. YEE: Okay. Mr. Leonard, do you want to -- 26 do you want to clarify the motion to recognize this -- 27 or it doesn't need to be clarified? 28 MS. KELLY: I think that the motion should -- 7 1 the vote should probably be rescinded and then the 2 motion remade. 3 MS. YEE: All right. So you want the 4 explicit -- okay. 5 MR. LEONARD: I need a better discussion from 6 Legal or what are the implications of this precedent for 7 future spouses who claim innocent status or not so 8 innocent status and are appealing that. 9 MS. KELLY: Well, to put it into perspective a 10 little bit, this is the first case that we have seen 11 that raises this issue. 12 It's most common for individuals to elect 13 relief with FTB and say, "I'm requesting innocent spouse 14 relief." And so that you can look at it and say the 15 election was under all sections, b, c and f. 16 In this particular case she submitted a form on 17 an IRS form and checked off equitable relief. So, -- 18 MS. YEE: Equitable relief. 19 MS. KELLY: -- there was no question. 20 MS. MANDEL: And Tyler Griffiths was just an 21 "f" case, as well? I don't remember. 22 MR. LEONARD: What's what I believe. 23 MS. KELLY: Yes, I believe it was. I believe 24 it was. 25 MS. MANDEL: And that's -- that's the Board's 26 memorandum decision -- 27 MS. KELLY: Right. 28 MS. MANDEL: -- precedent, right? 8 1 MS. KELLY: You know what, I think perhaps her 2 election was under "b" and "f". 3 MS. YEE: I think it was -- 4 MS. KELLY: The Tyler Griffiths addressed a 5 broader question of jurisdiction because we were looking 6 at what the 9th Circuit did, and I think it was 7 Commissioner v. Ewing -- 8 MS. MANDEL: Yeah. 9 MS. KELLY: -- where the 9th Circuit looked at 10 what the Tax Court was doing and said, "You don't have 11 jurisdiction over equitable cases." 12 MS. MANDEL: Yeah. 13 MS. KELLY: And so because of that decision by 14 the 9th Circuit we stepped back and looked at -- we 15 deferred our cases and looked at our jurisdiction more 16 exactly and compared our 18533 to the Federal code. 17 And because of the differences we found we do 18 have jurisdiction over equitable cases. 19 But they do need to be coupled with a request 20 for traditional relief -- 21 MS. YEE: Yeah. 22 MS. KELLY: Because that's how our statute is 23 worded. 24 MS. YEE: And I think that was Tyler Griffiths 25 where there was relief requested under "f" but it was 26 coupled with relief under "b" and "c", right. Okay. 27 MS. KELLY: So -- 28 MR. LEONARD: Could I do two motions -- let me 9 1 try it this way. One is simply to -- to deny 2 Mr. Williams' appeal and let -- let's dispose of it that 3 way. And then a second would be a motion that I would 4 then ask to be deferred pending Legal is for a 5 memorandum opinion, declaring our position on 6 jurisdiction. 7 MS. KELLY: I'm not quite sure what you mean. 8 We have the opinion, it's Tyler Griffiths, that speaks 9 directly to this issue 10 MR. LEONARD: Well, we don't -- we don't have a 11 BOE decision since that Court case. 12 MS. YEE: Actually -- 13 MS. MANDEL: Tyler Griffiths -- 14 MS. KELLY: Tyler Griffiths, that is the 15 Board's -- 16 MS. MANDEL: -- BOE -- is the BOE memo 17 decision. 18 MS. YEE: Yeah. From December of '06. 19 MS. KELLY: Uh-huh. It's the appeal of Tyler 20 Griffiths. 21 MR. LEONARD: Well, there's -- again, maybe -- 22 I guess you're -- I'm getting more confused. This is 23 somehow different from that decision. 24 MS. KELLY: It's the exact same. 25 MS. MANDEL: I think where he got -- remember, 26 I just asked you whether Tyler Griffiths was just an "f" 27 case alone. You said it was not an "f" case alone but 28 it went through all this analysis and con -- 10 1 concluded -- 2 MR. LEONARD: So it is different -- 3 MS. MANDEL: So that's where he's -- 4 MR. LEONARD: -- in some way? 5 MS. MANDEL: -- getting from that it seems 6 different than Tyler Griffiths and needs a separate 7 opinion. But -- 8 MS. KELLY: Right. And -- but, I'm sorry -- 9 MR. LEONARD: It may be different in form, not 10 substance. But it's different -- 11 MS. KELLY: I'm sorry. 12 MR. LEONARD: -- in some way is what I'm 13 sensing. 14 MS. KELLY: Right. And -- and I'm sorry for 15 the confusion. What -- what the Board held in Tyler 16 Griffiths that -- was that the Board does have 17 jurisdiction over equitable -- elections under equitable 18 relief if they're coupled with relief under "b" or "c" 19 but where there's an election only under "f", equitable 20 relief, the Board does not have jurisdiction. 21 MS. YEE: So what you're probably seeking 22 relative to this case is the "f" only relief. 23 MS. KELLY: "f" only? 24 MS. MANDEL: Which you're saying was -- was one 25 of the conclusions and statements in Tyler Griffith. 26 MS. KELLY: Uh-huh. 27 MR. LEONARD: Because the -- 28 MS. MANDEL: Because the Tax Court -- the Tax 11 1 Court had said, "We, the Tax Court, don't have 2 jurisdiction over 'f' only because we don't have -- we 3 don't have jurisdiction of 'f' cases, period, because we 4 don't have equitable" something or other are other. 5 MS. KELLY: Right, that's what the 9th Circuit 6 determined -- 7 MS. MANDEL: Right. 8 MS. KELLY: -- with respect to the -- 9 MS. MANDEL: And so then -- so then when -- 10 when we looked at it in Tyler Griffiths it was our -- 11 there was "f" involved in Tyler Griffith, are we going 12 to look at the "f" piece of it at all. Yeah, we're 13 going to look at the "f" piece of it because -- but only 14 where there's "b" and "c". 15 MS. KELLY: Exactly. And in this case there 16 was -- 17 MS. MANDEL: And in Tyler Griffith there was a 18 broader request than here. Here she only asked for "f" 19 so it falls into the Tyler Griffiths holding that you 20 had to have "b" and "c" to get to have "f" jurisdiction 21 at the Board of Equalization. 22 MS. KELLY: Exactly. 23 MR. LEONARD: Madam Chair. 24 MS. YEE: Yes, Mr. Leonard. 25 MR. LEONARD: I don't like these cases. I 26 don't like playing Divorce Court. Nevertheless, it also 27 strikes me that -- that by our precedence that our staff 28 would deny hearing to an appellant on the jurisdictional 12 1 grounds and that this Board would never see it, their 2 only relief would be Court, and I don't know how Court 3 handles these because there's -- it's not clear whether 4 the appellant taxpayer to Court is the one that is -- 5 has the Notice of Determination to pay the tax or not. 6 So, I don't know how they get into Superior 7 Court on this. I hate what -- my -- my quest is to make 8 sure that taxpayers have a forum. 9 MS. KELLY: Right. 10 MR. LEONARD: I understand there's places that 11 deny them jurisdiction because they've exhausted their 12 rights, they haven't followed their lower rights to get 13 to us, or they're -- they're simply so frivolous that 14 we -- we can't even address the issue. I understand 15 that. 16 But I'd hate to extend our precedent to -- to 17 delegate to staff to deny jurisdiction because of a more 18 ministerial that one of the parties checked the wrong 19 box on the original request for relief, and go from 20 there. 21 And I -- I don't know how to work my way out of 22 it. 23 MS. KELLY: Well, I can assure you that it's 24 not what's happening. These cases are taken in with 25 jurisdiction as an issue. And one of the reasons being 26 is that during the pendency of the appeal another basis 27 for jurisdiction can arise. 28 For any appeal where the -- the IRS or the Tax 13 1 Court has granted Federal relief -- 2 MS. MANDEL: Which is also what happened here. 3 MS. YEE: Uh-huh. 4 MS. KELLY: Yes, but it happened after that 5 subdivision expired, unfortunately. But for other cases 6 where Federal conformity is also an issue. And so, it's 7 not a clear cut check-the-box kind of thing. 8 MR. LEONARD: Okay. So you're -- let me -- let 9 me try it differently. So if -- if we do what you're 10 suggesting, that my motion is that we find for Mrs. and 11 FTB on the grounds that the -- that Mr. Williams didn't 12 show jurisdiction, that when Mr. -- if another 13 Mr. Williams comes back in the future we would still get 14 the case but the entire argument of that case would be 15 jurisdiction? We wouldn't get the merits unless they 16 showed -- 17 MS. KELLY: Unless they passed the hurdle. 18 Either under Tyler Griffiths or under another -- 19 MR. LEONARD: Okay. 20 MS. KELLY: -- subdivision. 21 MR. LEONARD: All right. That makes more 22 sense. I would -- in -- with the consent of the Board, 23 I would say that is my motion, or if you want me to 24 rescind and remake it -- 25 MS. YEE: Yeah, let's -- let's formally rescind 26 the -- 27 MR. LEONARD: Okay. 28 MS. YEE: -- prior motion. 14 1 MR. LEONARD: I move to rescind my motion -- 2 MS. YEE: Okay. 3 MR. LEONARD: -- where I didn't know what I was 4 doing. 5 MS. YEE: All right. Now, that's -- I 6 apologize for that. 7 Motion by Mr. Leonard to rescind the prior 8 motion on item B1a and 1b. I will second that motion. 9 Without objection that motion carries. And 10 then subsequent motion? 11 MR. LEONARD: Move to find for FTB and 12 Mrs. Williams on the grounds that Mr. Williams lacked 13 jurisdiction. 14 MS. YEE: Okay. Motion by Mr. Leonard. Is 15 there a second? 16 MS. STEEL: Second. 17 MS. YEE: Seconded by Ms. Steel. 18 Without objection, that motion carries. 19 Thank you very much. 20 ---oOo--- 21 22 23 24 25 26 27 28 15 1 ITEM B2. 2 MS. YEE: Okay. Next item. 3 MS. OLSON: B2, Rochelle M. Dorfler. 4 MS. YEE: Okay. I have item B2, Rochelle M. 5 Dorfler. Is there a motion? 6 MR. SHEA: I'll make a motion to sustain the 7 Franchise Tax Board. 8 MS. YEE: Okay. Motion by Mr. Shea to sustain 9 the Franchise Tax Board. 10 Is there a second? 11 I'll second that motion. 12 Discussion? 13 MS. STEEL: I have one question, does -- 14 MS. YEE: Ms. Steel. 15 MR. LEONARD: While -- during the hearing that 16 tax -- the Appellant said that she still married to her 17 husband. 18 MS. KELLY: Yes, that's what it sounded like 19 she said. 20 MS. YEE: Yes. 21 MS. KELLY: I think in the materials it 22 indicated that they were divorced at one time, so I'm 23 not sure. 24 MS. STEEL: That's what I was looking at -- the 25 documents. 26 MS. YEE: Yeah. No, she said they're still 27 married. 28 Okay. Other questions? Discussion? 16 1 Okay, please call the roll. 2 MS. OLSON: Madam Chair. 3 MS. YEE: Aye. 4 MS. OLSON: Mr. Leonard. 5 MR. LEONARD: Aye. 6 MS. OLSON: Ms. Steel. 7 MS. STEEL: Aye. 8 MS. OLSON: Mr. Shea. 9 MR. SHEA: Aye. 10 MS. OLSON: Ms. Mandel. 11 MS. MANDEL: Aye. 12 MS. OLSON: Motion carries. 13 ---oOo--- 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 17 1 ITEMB3 2 MS. YEE: Okay. Next item. 3 MS. OLSON: Our next item is B3, Frank Cutler. 4 This was a waived appearance. 5 MS. YEE: Okay. Item B3, Frank Cutler, who 6 waived appearance. 7 Is there a motion? 8 MR. SHEA: Sustain the Franchise Tax Board. 9 MS. YEE: Okay. Motion by Mr. Shea to sustain 10 the Franchise Tax Board. 11 Is there a second? 12 I'll second that motion. 13 Without objection, that motion carries. 14 ---oOo--- 15 16 17 18 19 20 21 22 23 24 25 26 27 28 18 1 ITEM B4. 2 MS. OLSON: Our next item is B4, Ajay Ranchhod. 3 MS. YEE: Okay. Item B4, Ajay Ranchhod. Is 4 there a motion? 5 MS. STEEL: I want to move to grant the 6 petition with respect to sales to Knotty Team Sports 7 but -- 8 MS. YEE: Oh, actually, that's -- that's the 9 next case. 10 MS. STEEL: Oh. Am I going too fast? 11 MS. YEE: Item B4. 12 MR. LEONARD: This is the -- 13 MS. YEE: Okay. 14 MS. MANDEL: Sustain the Franchise Tax Board. 15 MS. YEE: Okay, motion by Ms. Mandel to sustain 16 the Franchise Tax Board. 17 MR. SHEA: Second. 18 MS. YEE: Seconded by Mr. Shea. 19 Without objection, such will be the order. 20 ---oOo--- 21 22 23 24 25 26 27 28 19 1 ITEM C1. 2 MS. OLSON: The next item is C1, On Sports, 3 Incorporated. 4 MS. YEE: Okay, item C1, On Sports, 5 Incorporated. 6 Ms. Steel. 7 MS. STEEL: Yeah, I move to grant the petition 8 with respect to sales to Knotty Team Sports but 9 redetermine with the liability to other youth sports 10 organizations. 11 MS. YEE: Okay. A motion by Ms. Steel to grant 12 the petition as it relates to the Knotty Team Sports 13 related sales and otherwise redetermine. 14 MS. STEEL: Right. 15 MS. YEE: Okay, is there a second? 16 MR. LEONARD: I'll second, but I have a 17 question. 18 MS. YEE: Okay. Mr. Leonard. 19 MR. LEONARD: What's the tax consequences of 20 the motion to the youth organizations? 21 MS. MANDEL: She -- it sounds like she's 22 sustaining the staff on youth organizations. 23 MS. YEE: Right. 24 MR. LEONARD: Okay, and finding for taxpayer 25 on -- 26 MS. MANDEL: On -- 27 MR. LEONARD: -- which -- 28 MS. MANDEL: -- Knotty. 20 1 MS. YEE: Knotty Team Sports. 2 MS. STEEL: It's about $20,000. 3 MS. MANDEL: That was the 94 sales. 4 MS. YEE: Right. 5 MR. LEONARD: The which sports? 6 MS. MANDEL: Knotty -- Knotty Team. I think 7 it's the first -- 8 MS. STEEL: That's about $25,000, is that 9 right? 10 MR. LEVINE: I show $19,569. 11 MS. STEEL: $19,000, yes. 12 MS. YEE: 19,569. Okay. 13 MR. LEVINE: That's measure. 14 MR. LEONARD: Okay. That's the measure? 15 MR. LEVINE: Right. 16 MR. LEONARD: 19,000. And this is the one that 17 we tried to get the XYZ letter but couldn't? 18 MS. STEEL: Oh, actually, we have to deduct 19 the -- the Adidas -- the receipt came in for $440. They 20 had the document with a copy of the check. 21 MS. MANDEL: On the Adidas, that's the -- 22 MS. STEEL: That's -- 23 MS. MANDEL: -- issue they raised today. 24 MS. YEE: Right. Darren Matsubara in 25 section -- 26 MR. LEVINE: That wasn't part of the Knotty 27 Team. 28 MS. MANDEL: No, not Knotty Team. 21 1 MS. YEE: No, that's not what I said. 2 MR. LEVINE: That was -- 3 MS. MANDEL: She's just remembering it now. 4 MS. YEE: So you want to add that one on to 5 grant, as well, along with Knotty Team Sports? 6 MS. STEEL: Just one -- 7 MS. YEE: Just that one, whatever they had the 8 documentation then. 9 MS. STEEL: They had the document, right. 10 MS. YEE: Okay. All right. 11 So, motion by Ms. Steel to grant for Petitioner 12 as it relates to the Knotty Team Sports sales as well as 13 the transaction that was documented today relative to 14 the sale on behalf of Adidas, and otherwise redetermine. 15 Seconded by Mr. Leonard. 16 Okay. Please call the roll. 17 MS. OLSON: Madam Chair. 18 MS. YEE: No. 19 MS. OLSON: Mr. Leonard. 20 MR. LEONARD: Aye. 21 MS. OLSON: Ms. Steel. 22 MS. STEEL: Aye. 23 MS. OLSON: Mr. Shea. 24 MR. SHEA: No. 25 MS. OLSON: Ms. Mandel. 26 MS. MANDEL: No. 27 MS. OLSON: Motion fails. 28 MS. MANDEL: I'd do a 30-30-30 on the Adidas 22 1 transactions because he only -- he only brought some 2 document on one transaction and they said there was 3 about $6,000 and they might have been able to get other 4 information from Adidas. 5 They -- it sounded like that was a late 6 discovery on their part of the Dennis, whatever. Maybe 7 you don't believe it's a late discovery but I think 8 that's the way they described it. 9 MR. LEVINE: That's the way they described it. 10 In looking -- it seems like they were aware that he was 11 the representative of Adidas and their position, I 12 assume, has always -- 13 MS. MANDEL: A lot of stuff for one guy to buy, 14 $6,000. So, you know, I -- 15 MR. LEVINE: It's not that it's inappropriate 16 to ask Adidas to verify whether he was behind on their 17 account or not. I don't think that was done or else -- 18 MS. MANDEL: Yeah, because that's the way they 19 seemed to explain it, that they only asked Adidas about 20 the things that had Adidas' name on it, and that 21 might -- that can always happen sometimes if you have 22 the representative doing it, and then taxpayer comes in 23 and goes, well, you know, what about this? 24 MS. YEE: Okay. 25 MS. MANDEL: So that -- I'd do a 30-30-30 on 26 the Adidas transactions. 27 MS. YEE: Okay. Just on those and then -- 28 MS. MANDEL: Well, it doesn't sound like 23 1 they're going to have any -- I mean, if they had 2 anything else on anything that they thought really went 3 to it, I'm not restrictive on the 30-30-30 but that -- 4 as of right now the only thing that seemed like they 5 might have something to go somewhere was the Adidas 6 transaction. 7 MS. YEE: And then otherwise redetermine. 8 Okay, is that a motion? 9 MR. LEONARD: Can we do that? 10 MS. MANDEL: Well, they would -- I mean, it's a 11 30-30-30. 12 MR. LEONARD: A 30-30-30, I think. 13 MS. MANDEL: Yeah. 14 MS. YEE: For the -- for the -- okay, say 15 we're -- 16 MS. MANDEL: It's a 30-30-30, and -- 17 MR. LEONARD: Our direction is to limit it 18 to -- 19 MS. MANDEL: Well -- 20 MS. YEE: Just to the Adidas transactions? 21 MR. LEONARD: Right. 22 MR. LEVINE: What we could do is tell them that 23 that's specifically what you're asking for, which would 24 give the flexibility if they happen -- 25 MS. MANDEL: Right. 26 MR. LEVINE: -- to come up with anything 27 else -- 28 MR. LEONARD: Right. 24 1 MR. LEVINE: -- we could consider that without 2 being -- violating your order -- 3 MR. LEONARD: Second bite. 4 MS. MANDEL: Yeah. 5 MR. LEVINE: -- and be part of -- it would be 6 part of our recommendation back to you. 7 MS. YEE: Okay, fine. Motion by Ms. Mandel to 8 direct a 30-30-30 as it relates to the Adidas 9 transactions, certainly open to seeing anything else 10 that may arise. Seconded by Yee. 11 Without objection, that motion carries. 12 ---oOo--- 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 25 1 ITEM C4. 2 MS. OLSON: Our next item is C4, City of 3 Sacramento. 4 MS. YEE: Okay. Item C4, City of Sacramento. 5 Is there a motion? 6 MR. SHEA: I'll make a motion to adopt the 7 staff recommendation. 8 MR. LEONARD: Second. 9 MS. YEE: And the staff recommendation speaks 10 to the time bar issue, as well, is that right? 11 MR. SHEA: Well, we never really discussed 12 that. 13 MR. LEONARD: We didn't discuss that. 14 MS. YEE: Yeah, I -- 15 MR. LEONARD: We probably should have. 16 MS. YEE: I was a little troubled by the 17 discussion about the time bar issue. I'm certainly 18 prepared to vote on issue number 2, and I believe what 19 I'd like to do is maybe get some further clarification 20 on the -- on issue number 1. If that's possible. 21 MR. LEVINE: If you find that it should be 22 denied on issue 2, it doesn't matter about issue 1. 23 MS. YEE: Okay. 24 MR. LEVINE: And issue 1 is not going to arise 25 again. 26 MS. YEE: Correct. Okay. 27 MR. LEVINE: I think this is a one-time -- 28 MR. LEONARD: That's right. 26 1 MS. YEE: Right. 2 MR. LEVINE: -- old case -- 3 MR. LEONARD: This is that window. 4 MR. LEVINE: Yeah. 5 MS. YEE: Gotcha. All right. 6 MR. LEVINE: So, whether you like our 7 discussion or not, it's not going to matter because I 8 don't think you're ever going to see that discussion 9 again. 10 MS. YEE: Okay. 11 Mr. Shea, would you entertain adopting the 12 staff recommendation to deny the petition on the merits, 13 so that would just speak to issue number 2? 14 MR. SHEA: Yeah. I'm sorry, that was my 15 intent. 16 MS. YEE: Okay. 17 MR. SHEA: I thought with respect to the first 18 issue which never really was discussed this was -- you 19 know, the facts occurred in 1996 at a time when our 20 guidance was evolving. And even the Department and the 21 Appeals staff were not in agreement on this until a 22 couple of days ago. So, under those circumstances it 23 seemed like it made sense for the Board to decide the 24 case on the substantive issues and not deny the 25 Petitioner -- not statutorily bar the Petitioner from 26 obtaining a redistribution -- 27 MS. MANDEL: It -- it did seem a little 28 peculiar to deny timeliness based on a regulation that 27 1 was not yet in -- 2 MS. YEE: Right, exactly. 3 MR. SHEA: Yeah. 4 MS. YEE: Okay. 5 MS. MANDEL: Don't -- it seemed a little 6 peculiar. 7 MS. YEE: Yeah, that's my discomfort with it, 8 as well. 9 MS. MANDEL: So -- 10 MS. YEE: All right, so -- 11 MR. LEVINE: For the record, that wasn't what 12 we recommended, but I don't think it matters. It was 13 just to explain things. 14 MS. MANDEL: Oh, okay. 15 MS. YEE: Okay. Very well. We have a motion 16 by Mr. Shea to adopt the staff recommendation to deny 17 the petition on the substantive issue. 18 I will second that motion. 19 Without objection, that motion carries. 20 Thank you. 21 Next item. 22 ---oOo--- 23 24 25 26 27 28 28 1 ITEM D1. 2 MS. OLSON: Our next item is D1, Wafaa Abou 3 Quassim. 4 MS. YEE: Okay. Item D1, Wafaa Abou Quassim, 5 Incorporated. 6 Is there a motion? 7 MR. SHEA: Adopt the staff recommendation. 8 MS. YEE: Okay. Motion by Mr. Shea to adopt 9 the staff recommendation. 10 Is there a second? 11 I will second -- 12 MR. LEONARD: I'll second it. 13 MS. YEE: Mr. Leonard. Okay, seconded by Mr. 14 Leonard. 15 Without objection, that motion carries. 16 Okay, next item. 17 ---oOo--- 18 19 20 21 22 23 24 25 26 27 28 29 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 July 21, 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 29 13 pages constitute a complete and accurate transcription 14 of the shorthand writing. 15 16 Dated: July 6, 2009. 17 18 19 20 ____________________________ 21 BEVERLY D. TOMS 22 Hearing Reporter 23 24 25 26 27 28 30