1 BEFORE THE CALIFORNIA STATE BOARD OF EQUALIZATION 2 5901 GREEN VALLEY CIRCLE 3 CULVER CITY, CALIFORNIA 4 5 6 7 8 REPORTER'S TRANSCRIPT 9 FEBRUARY 24, 2010 10 11 SALES AND USE TAX APPEAL HEARING 12 APPEAL OF 13 C1a ELIZABETH WARDLEY KWONG 14 NO. 316054 (AP) 15 C1b RAYMOND WAH KWONG 16 NO. 316055 (AP) 17 AGAINST PROPOSED ASSESSMENT OF 18 SALES AND USE TAX 19 20 21 22 23 24 25 26 27 Reported by: Juli Price Jackson 28 CSR No. 5214 1 1 2 P R E S E N T 3 For the Board Betty Yee of Equalization: Chair 4 Jerome E. Horton 5 Vice-Chair 6 Bill Leonard Member 7 Michelle Steel 8 Member 9 Marcy Jo Mandel Appearing for John 10 Chiang, State Controller (per Government Code 11 Section 7.9) 12 Diane G. Olson, 13 Chief Board Proceedings 14 Division 15 For Board of David Levine 16 Equalization Staff: Staff Counsel 17 18 For Department: Andrew Kwee Tax Counsel 19 Robert Tucker 20 Tax Counsel 21 Kevin Hanks Chief, Headquarters 22 Operations Division 23 For Petitioners: Elizabeth Wardley Kwong 24 Taxpayer 25 ---oOo--- 26 27 28 2 1 5901 GREEN VALLEY CIRCLE 2 CULVER CITY, CALIFORNIA 3 FEBRUARY 24, 2010 4 ---oOo--- 5 MS. OLSON: Our next case is C1a, Elizabeth 6 Wardley Kwong and C1b, Raymond Wah Kwong. 7 Please come forward. 8 MS. YEE: Okay. I appreciate everybody's 9 patience, we are on item C1a and C1b, Elizabeth Wardley 10 Kwong and Raymond Wah Kwong. 11 Good morning, Mr. Levine. 12 MR. LEVINE: Good morning, Madam Chair, 13 Members. David Levine for the Appeals Division. 14 This is the petitions of Elizabeth Wardley 15 Kwong and Raymond Wah Kwong. As the Members are 16 probably aware, we issued a revised summary in which we 17 noted that conditioned on receiving a proper -- proper 18 request for relief from the amnesty interest penalty, we 19 would recommend relief. 20 We have received that request. So, we do 21 recommend relief of the amnesty interest penalty, 22 conditioned on the normal payment conditions -- payment 23 within 30 days or within that period an installment 24 agreement that is successfully completed. 25 With that, the remaining issues are whether 26 Petitioner's liability for tax debts of Permanent 27 Wiseguys, Inc., pursuant to Revenue and Taxation Code 28 Section 6829 has been discharged in bankruptcy and, if 3 1 not, whether any adjustments are warranted to the 2 underlying liability. 3 MS. YEE: Thank you very much. 4 Good morning. 5 MS. KWONG: Hi, how are you? 6 MS. YEE: Fine. If you'll pull that microphone 7 right up in front of you, so we can hear you? 8 MS. KWONG: I apologize, my husband's not here, 9 our daughter's home sick. And I've been the one dealing 10 with all this, so, I came. 11 MS. YEE: Okay. 12 MS. KWONG: So, I am sorry. 13 MS. YEE: All right. Are you prepared to 14 proceed? 15 MS. KWONG: Yes, yes, yes. 16 MS. YEE: Why don't you introduce yourself 17 formally for the record? 18 You have ten minutes for your presentation. 19 MS. KWONG: My name's Elizabeth Wardley Kwong, 20 I go by Liz. 21 MS. YEE: Okay. 22 MS. KWONG: I used to work with the Permanent 23 Wiseguys, my husband and I owned the company. We filed 24 the bankruptcy in 2002. 25 In September of 2002, our business, Permanent 26 Wiseguys, filed bankruptcy. According to my trustee and 27 our attorney, there was no claim that was received by 28 the Board of Equalization. 4 1 Then in 2002, based on having had a business 2 bankruptcy, we filed personal bankruptcy. And we used 3 the same proof list for proof of claims that we used for 4 the business bankruptcy. And again we did not receive a 5 file -- a claim from the State Board of Equalization. 6 Had the claims been received, in both cases 7 there were funds that were distributed -- some with the 8 taxes being the priority, IRS and the Franchise Tax 9 Board. 10 The first time I heard that the State Board had 11 filed a claim was when I received the documents in 12 December of 2009 about this appeals. And the first time 13 I actually saw a copy of the claim was this morning, 14 when I received a copy of it. 15 We received our first notice from the State 16 Board of Equalization about our taxes, the taxes due by 17 Permanent Wiseguys in June of 2005, which was two years 18 after the business bankruptcy was filed and three years 19 after our personal. They both had been released by that 20 time. 21 Under the bankruptcy terms we knew we owed 22 taxes, but we were never aware of the amount that we 23 owed. And we understood from our attorney that we -- 24 penalties and interest would not be accrued. 25 In -- since 2006, when I went back and forth 26 with a number of different people, a lot of the 27 documentation is either in files you've received or the 28 documentation that I gave you a copy of today. 5 1 I finally started working with Mr. Thomas, who, 2 off the record, is wonderful to work with and thank you. 3 I supplied him a number of copies of accounting 4 information from our company. I only had copies, I 5 didn't have the original because the trustees -- they 6 took all our files when we filed business bankruptcy. 7 So, Mr. Thomas understood that I was claiming 8 that we had some bad debt allowance because a number of 9 our clients -- they were .com clients and they had gone 10 under and that's what led up to our bankruptcy. So, we 11 did not receive money on that billing. 12 Our accountant had always filed quarterly taxes 13 based on what was billed, not what was received. And 14 then he would file a reconciliation at the end of the 15 year. 16 None of that happened because we filed 17 bankruptcy in September of 2000. 18 So, Mr. Thomas said, yes, I supplied the 19 information, however, it was not in general accounting 20 procedures. One, I didn't have the proper files to give 21 him the originals and, 2, my husband and I have paid 22 back so much over the past ten years for the bankruptcy 23 that we weren't in a position when I needed to give him 24 this in 2007 to hire an accountant to do that. So, I 25 gave -- and I explained that to him. 26 We didn't file a claim on the bad debts because 27 we felt that was all of the bankruptcy and that 28 everybody understood why. So, we feel we only owe the 6 1 money on the taxes of what we received from clients, 2 which again I've outlined on the documentation that I 3 gave you this morning. 4 And also we don't feel that we're responsible 5 for the penalties or interest charges. 6 Thank you. 7 MS. YEE: Thank you very much, Ms. Kwong. 8 We will give you time on rebuttal. 9 MS. KWONG: Okay. 10 MS. YEE: Department? 11 MR. KWEE: Good morning, Madam Chairwoman and 12 Members of the Board. I am Andrew Kwee on behalf of the 13 Board's Legal Department. 14 With me today are Bob Tucker, also from the 15 Legal Department and Kevin Hanks from the Sales and Use 16 Tax Department. 17 And we concur with the Appeals Division's 18 revised recommendations to relieve the amnesty interest 19 penalty and to delete the 6829 liability for the first 20 quarter of 2001. 21 Regarding the remaining liabilities, the 22 Petitioner disputes that the -- they are personally 23 liable for the remaining liabilities within the meaning 24 of Section 6829. 25 Basically they do not appear to dispute that 26 the four elements required to impose the 6829 liability 27 have not been met, instead they appear to be disputing 28 that there is sufficient -- that -- they appear to be 7 1 disputing that their personal liability was discharged 2 in bankruptcy or that the corporation is entitled to a 3 bad debt deduction and the amount of deduction, if 4 available. 5 Regarding the bankruptcy, the corporation filed 6 for a Chapter 11 bankruptcy on September 15th of 2000, 7 however, this case was involuntarily converted to a 8 Chapter 7 bankruptcy in April of 2001. 9 And due to the conversion, a discharge was not 10 granted or otherwise available because the debtor was a 11 corporation. Therefore, the corporation's debts were 12 not discharged in their bankruptcy filing. 13 Regarding the Petitioner's Chapter 7 individual 14 bankruptcy, they filed for this in 2002. And then they 15 received a discharge later in September of 2002. 16 However, under the Bankruptcy Code, taxes which are 17 assessable, but not yet assessed prior to the 18 commencement of the bankruptcy case are not discharged 19 in the bankruptcy. 20 And here Petitioners were not dualed until 21 2005. And this determination is still not yet final, 22 therefore, their bankruptcy -- their personal bankruptcy 23 discharge is not relevant for the liability at issue ear 24 here. 25 Regarding the bad debt deduction, the 26 Petitioners are claiming that the corporation should 27 have been entitled to a bad debt deduction. Now, 28 Section 6055 -- 6055 -- would provide for relief of 8 1 liability for tax due on transactions that were 2 previously reported as taxable under certain 3 circumstances where the retailer has not paid for the 4 merchandise and the debt is later properly charged off 5 as worthless for income tax purposes. 6 The amount here at issue, the deduction, is 7 based on nonremittance -- or the amount at issue is 8 based on nonremittance returns that were prepared by a 9 Certified Public Accountant, signed by the Petitioner, 10 Liz Kwong, and bad debt deductions were not taken in any 11 of the returns at issue. To support that a bad debt 12 deduction was available, the Petitioners submitted the 13 one page document labeled, "Wiseguys Sales Revenue for 14 January of 2000 until March 2001," which is attached as 15 Exhibit 3 to the Supplemental Decision and 16 Recommendation. And this document purports to contain 17 the corporation's total cash receipts for all 18 transactions, but the taxable and nontaxable and claims 19 that of all these transactions, only 1. -- or $1,205,482 20 is actually received by the corporation in the 15 months 21 prior to termination. It doesn't actually identify any 22 specific transaction, it's just a generic listing like 23 ad campaigns or Barclay's Bank or generic, no specific 24 dates were provided. 25 We do know that during the three months prior 26 to filing bankruptcy, plus a 37 day period shortly after 27 filing for bankruptcy, the corporation made cash 28 disbursements exceeding this amount. And as would be 9 1 required to support a bad debt deduction, Petitioner has 2 not identified any specific amounts qualifying as bad 3 debts related to transactions that were originally 4 reported as taxable, identified any amounts properly 5 charged off for income tax purposes or provided us any 6 type of comprehensive documentation for that entire 7 period to support the actual cash receipts, such as bank 8 statements or cash disbursement lists or other such 9 information. 10 Therefore, we believe that the bad debt 11 deduction wasn't sufficiently documented and we concur 12 with Appeals Division's revised recommendations for the 13 remaining liability period. 14 MS. YEE: Thank you very much, Mr. Kwee. 15 Ms. Kwong, you have five minutes on rebuttal. 16 MS. KWONG: As I had said, we were not able to 17 file the proper documentation because everything was 18 removed. Even when we did file Chapter 11 we had to 19 turn all our files over to the Trustee, the Department 20 of Justice Trustee. 21 Had I known the taxes were due earlier than the 22 2005 notice we got, we might have been able to get the 23 original files back from the Trustee. 24 Once the -- everything's been discharged, 25 there's an amount of time that you can get your files, 26 but I wasn't allowed to after that. 27 So, I have no original files. I have no 28 documentation because they had -- they took 10 1 everything. 2 As far as the claims, again I go back to my 3 attorney and the Department of Justice Trustee said that 4 there was no claim, it was never listed as one of the 5 claims either on the personal or the business 6 bankruptcy. 7 We did -- to try to make -- to try to resolve 8 everything faster, we did try to make an offer in 9 compromise to the Board of Equalization and that was 10 turned down. We did that in 2006 and that's when I 11 started working with Mr. Thomas. 12 MS. YEE: Very well, thank you very much. 13 Questions, Members? Discussion? 14 Mr. Leonard? 15 MR. LEONARD: I guess -- where are these 16 documents today? 17 MS. KWONG: I gave Mr. Thomas a set of -- 18 MR. LEONARD: Okay. 19 MS. KWONG: -- our accounting records. And I 20 have a set here. 21 They're limited again because I only had 22 copies. And the rest of them are with the Department of 23 Justice, I assume, with the Trustee. 24 I don't know what they do. 25 MR. LEONARD: The evidence that would sustain 26 your bad debt deduction is -- where is that? 27 MS. KWONG: I have a set of the copies here and 28 Mr. Thomas has a set. 11 1 MR. LEONARD: Mr. Thomas does? 2 MS. KWONG: Yes. 3 MR. LEONARD: Does Mr. Thomas process those? 4 Is that something you would accept an amendment to the 5 return if there is a bad debt deduction that was not 6 taken? 7 MR. HANKS: Mr. Leonard, it was my 8 understanding that the information that Mr. Thomas was 9 reviewing is summarized in the exhibit that we have 10 before us. 11 I wasn't aware that there was any other detail. 12 Certainly if there is detailed records that establish 13 the sales and recognize bad debts and meet the other 14 criteria of Regulation 1642, we'd like to see that 15 because we could -- we could certainly make an 16 adjustment. 17 MR. LEONARD: If -- assuming there might be for 18 a moment, how do we best proceed? 19 Do we conclude this hearing and let you guys 20 work it out or do we put this over? 21 What's -- 22 MR. HANKS: I'd probably recommend a 30-30-30 23 type decision. So that we would look at the 24 Petitioner's submissions and see if -- 25 MR. LEONARD: It's possible a corporation going 26 under would have some bad debts and debtors might know 27 they could not pay and nobody's around to go after them. 28 MS. KWONG: And then the other -- am I not 12 1 allowed? 2 I am sorry. 3 MS. YEE: Please, Ms. Kwong? 4 MS. KWONG: The other thing is we were an 5 advertising agency. So, we did not bill tax on media or 6 on retainer work. And that, we -- we had been audited 7 and told that that's what we did not need to bill on. 8 We only billed on actual work that we did. 9 So, that was -- that was maybe some of the 10 difference with the money going out. We had bought a 11 lot of media for some of these clients and we didn't -- 12 MR. LEONARD: So, you're saying the tax -- 13 MS. KWONG: We didn't collect tax on media. 14 MR. LEONARD: You're saying the tax that the 15 Department is asserting is based on sales that were not 16 taxable? 17 MS. KWONG: No, the tax where they're talking 18 about funds going out of the corporation during that 19 period, some of those funds were going to purchase 20 media. 21 MR. LEONARD: And that -- has that been audited 22 by the Department? 23 Did they respond to -- 24 MS. KWONG: I don't know where they got that 25 number. I just heard that some of the funds going 26 out -- 27 MS. YEE: Mr. Kwee, can you clarify? 28 MR. KWEE: Right and what had happened was we 13 1 were provided a cash disbursements list and the list 2 documented every -- 3 MS. KWONG: Oh, then -- 4 MR. KWEE: -- cash disbursement. 5 MS. KWONG: -- that was mine, I'm sorry. 6 But a lot of that going out was media money. 7 MS. YEE: Okay. 8 MS. MANDEL: And the point of that list was for 9 what? 10 MR. KWEE: We were just noting that they made 11 substantial cash disbursements. 12 MS. MANDEL: So, that was for to support the 13 responsible person? 14 MR. KWEE: Right. 15 MS. MANDEL: So, it wasn't that part of the -- 16 I mean, she's thinking that part of the underlying tax 17 liability was computed, perhaps, that's what it sounds 18 like. 19 MS. KWONG: No, I just wanted you to know why 20 some of the money went out it. 21 MS. MANDEL: Oh, okay. 22 MS. KWONG: It sounded like they thought some 23 money went out that we should have used to pay the taxes 24 or we should have been paying taxes. 25 So, I probably misunderstood it. 26 MS. YEE: Mr. Levine? 27 MR. LEVINE: Just my understanding of that 28 comment was to show that money must have been coming in 14 1 because money was going out. 2 So, some of the -- so, there must have been 3 more -- more customers paying than one, but I may have 4 misunderstood. 5 MR. HANKS: Ms. Yee, I think we have one other 6 question too and that relates to how the Petitioner 7 reported their sales. 8 If they're reporting on a cash basis then there 9 would be no situation where they could claim a bad debt, 10 but if they're reporting on an accrual basis, then, yes, 11 it's something we would very much like to look at. 12 So, that would be a question that we would have 13 for the Petitioner as well. 14 MS. KWONG: It is -- we were doing it on an 15 accrual basis. 16 But again I couldn't get my accounting firm to 17 supply all of the stuff because we -- they were on the 18 list of the money we still owe. 19 MS. YEE: Okay. Mr. Levine, typically these 20 records that do get turned over to the Department of 21 Justice, what -- is there any ability to access them? 22 MR. LEVINE: I could only guess. 23 MS. KWONG: Well, I tried in 2006 contacting 24 the Trustee, who will talk to me as the Petitioner -- or 25 as the person that was -- the bankruptcy was filed 26 against. He said I had to go through our attorney. 27 And I wasn't able to go through our attorney 28 because we owe him money also. 15 1 MR. LEONARD: Can we request -- I mean, I 2 understand we don't -- 3 MR. LEVINE: There's nothing to stop the 4 Department from requesting. 5 And then we can find out if that request will 6 be complied with. I find it hard to believe that the 7 Trustee won't talk to the actual Petitioner, but -- 8 MR. HORTON: Well, because she was represented 9 by counsel, so, the Trustee probably is just doing that, 10 you know, "I can't talk to you directly, I have to talk 11 to your lawyer." 12 MS. STEEL: I have just one question to the 13 Department that taxpayer claims that never saw the 14 Department filed a claim against bankruptcy. 15 Do we have any proof about that? 16 MR. HANKS: We do, Ms. Steel. 17 In fact, we brought copies of those claim forms 18 and I believe that with -- we've supplied those as 19 exhibits as well. 20 MS. STEEL: Just -- yeah, okay. 21 MR. HANKS: So, those claims were filed. 22 MS. KWONG: But my -- I never saw a copy 'til 23 this morning and nobody ever told me when I questioned 24 was a file claimed? I never heard from the Board that 25 it was. 26 And my attorney never saw a copy. And from 27 what I understand, the Trustee never saw a copy. 28 MS. YEE: All right. Other questions, Members? 16 1 Discussion? 2 MS. MANDEL: Maybe I missed it, but I thought 3 there was a reference that a claim -- a BOE claim was 4 paid out of the bankruptcy? 5 MR. KWEE: We did not receive any payments. 6 MS. MANDEL: Okay. 7 MR. HANKS: No. 8 MS. KWONG: A claim was paid to the Franchise 9 Tax Board. 10 MS. MANDEL: Franchise Tax Board? 11 MS. KWONG: And to the IRS. 12 MS. YEE: Okay. 13 MR. LEONARD: Madam Chair, I'd move a 14 30-30-30 and -- 15 MR. HORTON: Second. 16 MR. LEONARD: -- instruct the taxpayer to do 17 everything they can, she can and her husband, to get the 18 documents and ask the Board's legal folks to review what 19 documents you do have and to ask the Bankruptcy Court if 20 they could share. 21 MS. YEE: Okay. 22 MS. STEEL: I have one more question to 23 Mr. Levine, that -- how -- I mean, I saw here today that 24 it's been claimed. 25 How can -- franchise Tax Board has been paid 26 but why Board of Equalization was not paid from the same 27 Bankruptcy Court? 28 MR. LEVINE: This is a bankruptcy glitch. 17 1 Looking at these exhibits, it appears that they 2 were stamped. They should have been in the bankruptcy. 3 Her attorney should have been aware of it. The Trustee 4 should have been aware of it. I can't explain to you 5 why they weren't. 6 Had they been aware of it, I assume that the 7 Board would have shared in the taxes that were paid out, 8 perhaps prorated or something, we would have received 9 something. So, there was apparently a glitch, but that 10 was not -- this appears to have been filed. It's 11 stamped. One document was stamped back in 2000, which I 12 assume is the filing in the corporate bankruptcy. And 13 then the letter in July of 2001, perhaps, was the -- 14 both of these -- 15 MS. KWONG: But then one was not filed on our 16 personal bankruptcy. One was sent to the State Board of 17 Equalization and one was not filed. 18 Then I haven't seen a copy of that. 19 MS. MANDEL: That would be because, Mr. Levine? 20 MR. LEVINE: They hadn't assessed it yet. 21 MS. MANDEL: It wasn't assessed. 22 MR. LEVINE: They hadn't determined it yet. 23 And, so, they didn't file the claim. 24 The valid claim was apparently filed in the 25 corporation's and that's where it should have shared in 26 the proceeds and apparently it did not. 27 MS. STEEL: What was at FTB's steps to get paid 28 and Board of Equalization didn't follow through or -- 18 1 you say it's a glitch, but -- 2 MR. LEVINE: Again -- 3 MS. STEEL: -- how come -- 4 MR. LEVINE: -- I can only guess. 5 MS. STEEL: -- FTB and then BOE? 6 MR. LEVINE: Out of our control, I assume. I 7 think that FTB's would have been just like this and 8 theirs got processed properly. 9 I cannot explain why this did not. 10 MS. KWONG: And some of the Franchise Tax Board 11 also got paid in our personal claim because they filed 12 for the difference. 13 So, that -- and then we finished paying them 14 off from the personal bankruptcy from the claim that we 15 received in that. 16 MS. YEE: Okay. All right, we have a motion by 17 Mr. Leonard, second by Mr. Horton to grant a 30-30-30. 18 And Ms. Kwong, I would have you confer with the 19 staff after this hearing. 20 MS. KWONG: Can you tell me what a 30-30-30 is? 21 MS. YEE: Yes, yes. 22 MS. KWONG: Thank you. 23 MS. YEE: They'll explain what's expected of 24 you, yes. 25 MS. KWONG: Okay. 26 MS. YEE: But it does allow you more time to -- 27 MR. LEONARD: I'm sorry. 28 MS. YEE: Mr. Leonard. 19 1 MR. LEONARD: Although I used the shorthand of 2 giving the taxpayer 30 days to come up with something, 3 my motion really is to give -- instruct the Department, 4 as well as the taxpayer, to begin immediately to try to 5 recover these documents and review the return and then 6 share with each other. 7 So, it's our usual thing of 30 days you have to 8 submit something, 30 days for you to comment and then 30 9 days for him to comment is slightly altered by the fact 10 you may have something that taxpayers don't have or you 11 may have legal access to documents that taxpayers have 12 trouble getting. 13 MS. YEE: And I'm assuming, Mr. Leonard, that 14 you'd like the Department to attempt to request -- 15 MR. LEONARD: Yes. 16 MS. YEE: -- those records? 17 Okay, from Justice. 18 MR. LEONARD: Did you have a question on that? 19 MR. TUCKER: I just gave some instructions to 20 Mr. Kwee, he'll speak with her and explain what would be 21 most helpful. 22 MR. LEONARD: Okay. 23 MR. TUCKER: Just the type of documentation and 24 support. 25 MR. LEONARD: Great. Well, thank you for your 26 help. 27 MS. YEE: Thank you. 28 MS. KWONG: Can I ask one more question? 20 1 MS. YEE: Yes, Ms. Kwong? 2 MS. KWONG: I know we haven't addressed the 3 penalties and the interest, but will they be -- will 4 they continue while this is happening? 5 MS. YEE: They will continue. 6 MR. LEONARD: Well, the -- 7 MS. MANDEL: Hang on a second. 8 MR. CHIANG: The amnesty penalty -- 9 MS. KWONG: That was removed, but there's 10 still -- 11 MR. LEVINE: It's day still conditioned -- 12 MS. YEE: It's payment. 13 MR. LEVINE: -- payment. 14 MR. LEONARD: Still conditioned on payment. 15 MS. MANDEL: But payment after the whole thing 16 is done, right? 17 MR. LEVINE: And I believe that there is still 18 other penalties remaining on the liability that remains. 19 MS. YEE: Yes. 20 MS. MANDEL: As a result of the underlying 21 penalties? 22 MR. LEVINE: Correct, nonamnesty penalties, I 23 believe they're the late payment penalties. 24 MS. YEE: Yes. So -- 25 MR. LEONARD: Whatever you owe, you could 26 reduce by making payments now to the number you think is 27 accurate. 28 MS. KWONG: Okay. 21 1 MR. LEONARD: To answer your question on 2 interest. 3 MS. YEE: Okay, very well. 4 Motion by Mr. Leonard, second by Mr. Horton to 5 grant a 30-30-30. 6 Without objection, that motion carries. 7 Thank you, Ms. Kwong. Mr. Kwee will confer 8 with you. 9 MS. KWONG: Thank you. 10 MS. YEE: Thank you. 11 ---o0o--- 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 22 1 REPORTER'S CERTIFICATE. 2 3 State of California ) 4 ) ss 5 County of Sacramento ) 6 7 I, JULI PRICE JACKSON, Hearing Reporter for the 8 California State Board of Equalization certify that on 9 FEBRUARY 24, 2010 I recorded verbatim, in shorthand, to 10 the 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 pages 1 13 through 22 constitute a complete and accurate 14 transcription of the shorthand writing. 15 16 Dated: June 9, 2010 17 18 19 ____________________________ 20 JULI PRICE JACKSON 21 Hearing Reporter 22 23 24 25 26 27 28 23