1 BEFORE THE CALIFORNIA STATE BOARD OF EQUALIZATION 2 450 N STREET 3 SACRAMENTO, CALIFORNIA 4 5 6 7 8 REPORTER'S TRANSCRIPT 9 NOVEMBER 17, 2010 10 11 FRANCHISE AND INCOME TAX MATTERS 12 (Item H2) 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 Reported by: Kathleen Skidgel 28 CSR No. 9039 1 TOWN & COUNTRY DEPOSITION SERVICE (530) 642-0333 1 P R E S E N T 2 For the Board Betty Yee of Equalization: Chair 3 Jerome E. Horton 4 Vice-Chair 5 Barbara Alby Acting Member 6 Michelle Steel 7 Member 8 Marcy Jo Mandel Appearing for John 9 Chiang, State Controller (per Government Code 10 Section 7.9) 11 Diane G. Olson, Chief 12 Board Proceedings Division 13 14 ---oOo--- 15 16 17 18 19 20 21 22 23 24 25 26 27 28 2 TOWN & COUNTRY DEPOSITION SERVICE (530) 642-0333 1 INDEX OF SPEAKERS 2 3 Name Page 4 Glenn A. Smith. 7 5 ---oOo--- 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 3 TOWN & COUNTRY DEPOSITION SERVICE (530) 642-0333 1 450 N STREET 2 SACRAMENTO, CALIFORNIA 3 NOVEMBER 17, 2010 4 ---oOo--- 5 MS. YEE: Okay. Let us move to H2, Franchise 6 Income Tax matters, adjudicatory. We'll take them up one 7 at a time. We do have a speaker on subitem 5, or 8 actually -- yes, a speaker that may be available on subitem 9 5, if necessary, on the Culver case. 10 But subitem 1, Thomas A. Leonardino and Karen M. 11 Leonardino, is there a motion, Members? 12 MS. STEEL: Do we have a speaker for this? 13 MS. YEE: Not for this one. That's on subitem 5. 14 MR. HORTON: Move to adopt staff recommendations. 15 MS. YEE: Okay. This is to sustain the Franchise 16 Tax Board? 17 MR. HORTON: Yes. 18 MS. YEE: Okay. Motion by Mr. Horton to sustain 19 the Franchise Tax Board. Is there a second? 20 I will second that motion. Discussion? 21 MS. STEEL: Just objection. 22 MS. YEE: Okay. 23 Hearing no other discussion, please call the roll. 24 MS. OLSON: Madam Chair. 25 MS. YEE: Aye. 26 MS. OLSON: Ms. Alby. 27 MS. ALBY: No. 28 MS. OLSON: Ms. Steel. 4 TOWN & COUNTRY DEPOSITION SERVICE (530) 642-0333 1 MS. STEEL: No. 2 MS. OLSON: Mr. Horton. 3 MR. HORTON: Aye. 4 MS. OLSON: Ms. Mandel. 5 MS. MANDEL: Aye. 6 MS. OLSON: Motion carries. 7 MS. YEE: Okay. Next item is subitem 2, Daniel C. 8 Lorti. May I have a motion? 9 MS. MANDEL: Move staff recommendation. 10 MS. YEE: Okay. Motion by Ms. Mandel to adopt 11 staff recommendation. Is there a second? 12 MR. HORTON: Second. 13 MS. YEE: Second by Mr. Horton. Discussion? 14 Objection? 15 Hearing none, such will be the order. 16 Subitem 3, Shiro Shiozawa. Is there a motion? 17 MS. OLSON: I just need to let you know that Board 18 Proceedings did not receive contribution disclosures for 19 this item. 20 MS. YEE: All right. Okay. 21 MS. MANDEL: Move staff recommendation. 22 MS. YEE: Motion by Ms. Mandel to adopt staff 23 recommendation. Is there a second? 24 MR. HORTON: Second. 25 MS. YEE: Second by Mr. Horton. Discussion? 26 Objection? 27 Hearing none, that motion carries. 28 Subitem 4 is Leonard Shlain and Ina Gyemant. Is 5 TOWN & COUNTRY DEPOSITION SERVICE (530) 642-0333 1 there a motion? 2 MS. MANDEL: Move staff recommendation. 3 MR. HORTON: Second. 4 MS. YEE: Motion by Ms. Mandel to adopt staff 5 recommendation. Second by Mr. Horton. Objection? 6 MS. STEEL: Objection. 7 MS. YEE: Okay. Discussions? 8 MS. STEEL: Taxpayer's husband suffered with a 9 brain tumor. I thought there was a reasonable cause that 10 he made a mistake here. And he was 71 years old, and he 11 went through surgery. 12 MS. YEE: I think at least the evidence that was 13 submitted suggested that he was still earning wages in both 14 the year in question, the tax year in question, and the 15 subsequent year. 16 Other questions? Comments? 17 Okay. We have a motion by Ms. Mandel, second by 18 Mr. Horton, to adopt the staff recommendation. 19 Please call the roll. 20 MS. OLSON: Madam Chair. 21 MS. YEE: Aye. 22 MS. OLSON: Ms. Alby. 23 MS. ALBY: No. 24 MS. OLSON: Ms. Steel. 25 MS. STEEL: No. 26 MS. OLSON: Mr. Horton. 27 MR. HORTON: Aye. 28 MS. OLSON: Ms. Mandel. 6 TOWN & COUNTRY DEPOSITION SERVICE (530) 642-0333 1 MS. MANDEL: Aye. 2 MS. OLSON: Motion carries. 3 MS. YEE: Okay. Next subitem, subitem 5, Bruce 4 Culver and Donna Turner Culver. 5 Mr. Smith, are you in the audience? 6 MR. SMITH: Yes, ma'am. 7 MS. YEE: Did you wish to speak on this matter? 8 MR. SMITH: For perhaps 30 seconds. 9 MS. YEE: Okay. Please come forward. Actually you 10 have three minutes, so you may take that time. 11 MR. SMITH: I will make you the gift of time on 12 that. 13 MS. YEE: That's all right. It's your time. 14 MR. SMITH: Thank you, Madam Chair. 15 I believe our -- 16 MS. YEE: If you'll introduce yourself formally for 17 the record. 18 MR. SMITH: I'm Glenn A. Smith. I'm representing 19 Bruce Culver. 20 MS. YEE: Okay. 21 MR. SMITH: I believe our views are adequately set 22 forth in the petition for rehearing. My appearance is to 23 be available for questions if any arise. 24 MS. YEE: Okay. 25 MR. SMITH: And that's my statement. 26 MS. YEE: All right. Thank you very much. 27 Desire of the Board? 28 MR. HORTON: Move that we put it over for 7 TOWN & COUNTRY DEPOSITION SERVICE (530) 642-0333 1 consideration. 2 MS. YEE: Okay. Motion by Mr. Horton to take this 3 matter under submission. Is there a second? 4 MS. STEEL: Second. 5 MS. YEE: Second by Ms. Steel. Without objection, 6 such will be the order. 7 Mr. Smith, we're going to deliberate on this 8 further later today. Let us take a look. 9 MR. SMITH: Thank you. 10 MS. YEE: Thank you for being here. 11 Okay. Our next, subitem 6, Donald and Christine 12 Watson. May I have a motion, please? 13 MS. MANDEL: Move staff recommendation. 14 MR. HORTON: Second. 15 MS. YEE: Motion by Ms. Mandel, second by Mr. 16 Horton. Discussion? 17 MS. STEEL: Just objection. 18 MS. YEE: Okay. All right. Please call the 19 roll. 20 MS. OLSON: Madam Chair. 21 MS. YEE: Aye. 22 MS. OLSON: Ms. Alby. 23 MS. ALBY: No. 24 MS. OLSON: Ms. Steel. 25 MS. STEEL: No. 26 MS. OLSON: Mr. Horton. 27 MR. HORTON: Aye. 28 MS. OLSON: Ms. Mandel. 8 TOWN & COUNTRY DEPOSITION SERVICE (530) 642-0333 1 MS. MANDEL: Aye. 2 MS. OLSON: Motion carries. 3 MS. YEE: Okay. Next subitem, subitem 7, NASSCO 4 Holdings, Incorporated. This is a formal opinion matter. 5 Is there a motion? 6 MS. STEEL: I move to adopt the formal opinion. 7 MS. YEE: Okay. Motion by Ms. -- 8 MS. STEEL: They are doing it here, in this Board. 9 MS. YEE: Yeah. Motion by Ms. Steel to adopt the 10 formal opinion in this matter. Is there a second? 11 MS. ALBY: Second. 12 MS. YEE: Second by Ms. Alby. 13 MS. MANDEL: Objection. 14 MS. YEE: Okay. Discussion? 15 MS. MANDEL: Well, as you know, the Controller was 16 in objection to the drafting of a formal opinion on the 17 matter. I support the denial of the Franchise Tax Board's 18 petition for rehearing, but not the issuance of a formal 19 opinion. 20 MS. YEE: Okay. All right. Thank you, Ms. Mandel. 21 Okay. We have a motion, a second, to adopt the 22 formal opinion. Please call the roll. 23 MS. OLSON: Madam Chair. 24 MS. YEE: I'm going to abstain on this. 25 MS. OLSON: Ms. Alby. 26 MS. ALBY: Aye. 27 MS. OLSON: Ms. Steel. 28 MS. STEEL: Aye. 9 TOWN & COUNTRY DEPOSITION SERVICE (530) 642-0333 1 MS. OLSON: Mr. Horton. 2 MR. HORTON: Aye. 3 MS. OLSON: Ms. Mandel. 4 MS. MANDEL: No. 5 MS. OLSON: Motion carries. 6 MS. YEE: Okay. Let's move on to H5. 7 (The matter concluded at 11:43 a.m.) 8 ---oOo--- 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 10 TOWN & COUNTRY DEPOSITION SERVICE (530) 642-0333 1 REPORTER'S CERTIFICATE 2 3 State of California ) 4 ) ss 5 County of Sacramento ) 6 7 I, KATHLEEN SKIDGEL, Hearing Reporter for the 8 California State Board of Equalization certify that on 9 November 17, 2010 I recorded verbatim, in shorthand, to the 10 best of my ability, the proceedings in the above-entitled 11 hearing; that I transcribed the shorthand writing into 12 typewriting; and that the preceding pages 1 through 10 13 constitute a complete and accurate transcription of the 14 shorthand writing. 15 16 Dated: December 17, 2010 17 18 19 ____________________________ 20 KATHLEEN SKIDGEL, CSR #9039 21 Hearing Reporter 22 23 24 25 26 27 28 11 TOWN & COUNTRY DEPOSITION SERVICE (530) 642-0333