BEFORE THE CALIFORNIA STATE BOARD OF EQUALIZATION 5901 Green Valley Circle, Room 207 Culver City, California REPORTER'S TRANSCRIPT JUNE 21, 2011 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 Jerome E. Horton of Equalization: Chairman 5 Michelle Steel 6 Vice-Chairwoman 7 Betty T. Yee Member 8 George Runner 9 Member 10 Marcy Jo Mandel Appearing for John Chiang 11 State Controller (per Government Code 12 Section 7.9) 13 Diane Olson, Chief Board Proceedings Division 14 15 Board of Equalization 16 Staff: Lou Ambrose 17 Appeals Division 18 19 Grant Thompson 20 Appeals Division 21 --oOo--- 22 23 24 25 26 27 28 2 1 ITEM B1 2 Culver City, California 3 June 21, 2011 4 ---oO0--- 5 MR. HORTON: Ms. Olson. 6 MS. OLSON: Our next item is those items that 7 have been taken under submission. And our first item is 8 B1, Gerald J. Marcil and Carol L. Marcil. 9 MR. HORTON: Members, we are now on B1. Is 10 there a motion, Members? 11 MS. YEE: Move to sustain the Franchise Tax 12 Board. 13 MR. HORTON: Ms. Yee moves to sustain the 14 Franchise Tax Board. Is there a second? 15 MS. MANDEL: Can we put this one to tomorrow so 16 I can -- I want to -- 17 MR. HORTON: Ms. Mandel requests that we put 18 this over to tomorrow. Any objection, Members? 19 Hearing none, so be it. 20 ---oOo--- 21 22 23 24 25 26 27 28 3 1 ITEMB2 2 MR. HORTON: Next item, Ms. Olson. 3 MS. OLSON: Our next item is B2, Howard Brief. 4 MR. HORTON: Is there a motion, Members? 5 MS. YEE: Move to sustain the Franchise Tax 6 Board. 7 MR. HORTON: It's been moved to sustain the 8 Franchise Tax Board. Discussion -- is there a second? 9 MS. MANDEL: Second. 10 MR. HORTON: Second by Ms. Mandel. 11 Discussion, Members? 12 MS. STEEL: Just objection. 13 MR. HORTON: Objection by Ms. Steel. 14 Further discussion, Members? 15 Hearing none, Ms. Olson, please call the 16 roll. 17 MS. OLSON: Mr. Horton. 18 MR. HORTON: Aye. 19 MS. OLSON: Ms. Steel. 20 MS. STEEL: No. 21 MS. OLSON: Mr. Runner. 22 MR. RUNNER: No. 23 MS. OLSON: Ms. Yee. 24 MS. YEE: Aye. 25 MS. OLSON: Ms. Mandel. 26 MS. MANDEL: Aye. 27 MS. OLSON: Motion carries. 28 ---oOo--- 4 1 ITEM B3 2 MR. HORTON: Next item, Ms. Olson. 3 MS. OLSON: Our next item is B3, Jaroslav 4 Marik -- 5 MS. MANDEL: I think we did that one. 6 MS. YEE: We -- we did. 7 MS. MANDEL: Is that the 30-30-30? 8 MS. YEE: No, that was the next one. 9 MR. RUNNER: It was B4. 10 MR. HORTON: The next one, B4. 11 MS. MANDEL: Oh, B4. Wrote it in the wrong 12 place. Thank you. 13 MS. OLSON: And Jirina Marik. 14 MS. STEEL: I want to move to grant the basis 15 of one million, the investment -- ordinary investment in 16 2009, not 2004. 17 MR. HORTON: Okay. There's a motion on the 18 floor by Ms. Steel to -- I believe to -- 19 MS. STEEL: 2009 was the -- the -- the court -- 20 MR. RUNNER: Can I -- 21 MS. YEE: Could -- 22 MR. RUNNER: Before we -- I'd like to discuss 23 that before you say -- 24 MS. YEE: Could -- let -- let me -- I'll second 25 it, and I do want to weigh in on this. 26 MR. HORTON: Okay. There's a second on the 27 floor. 28 Discussion. Ms. Yee then Mr. Runner. 5 1 MS. YEE: Okay. Ms. Steel, I -- I agree with 2 you, I think this -- it relates to the appellant being 3 entitled to the million dollar loss on their 2009 4 return, right? 5 MR. HORTON: Uh-huh. 6 MS. YEE: I think though as part of the motion 7 it be subject to the verification of the tax basis 8 because I think there was still some question related to 9 that one. 10 MR. AMBROSE: I -- there was -- right, that was 11 kind of the second part of the question. 12 MS. YEE: Uh-huh. 13 MR. AMBROSE: And I don't know that that was 14 ever determined. I mean, I think FTB's position was 15 that they hadn't established basis so -- 16 MS. YEE: Right. 17 MR. AMBROSE: -- it couldn't be allowed. 18 MS. YEE: Right. 19 I mean, I think in terms of applying the loss 20 to the year that's -- that's -- I don't have an issue 21 with that but it is with -- it is subject to 22 verification of the -- 23 MS. MANDEL: I'm sorry, what's -- what's the 24 motion that's on the table? 25 MS. YEE: I think it's -- I guess the proper 26 motion should be to sustain the Franchise Tax Board but 27 to find that appellant should be entitled to this 28 million dollar loss for the 2009 tax year subject to 6 1 verification of the tax basis. 2 MS. MANDEL: Which I think is -- I thought that 3 was what -- I thought FTB agreed during the hearing that 4 it would be 2009 subject to whatever their adjusted 5 basis -- if they could prove adjusted basis. 6 MS. YEE: Right. 7 MR. AMBROSE: Right. I -- and I guess I'm 8 just -- I don't know what the effect of a -- of the 9 Board's decision in that regard would be. I mean, 10 they've -- 11 MS. YEE: Was it a concession? I mean, did 12 they revise -- did -- 13 MR. AMBROSE: It -- it wasn't clear -- or it 14 wasn't clearly stated that way. 15 MS. YEE: Uh-huh. 16 MR. AMBROSE: It was stated that -- 17 MS. YEE: I think it was acknowledged that -- 18 you know, it ought to be -- 19 MR. AMBROSE: Yeah, it was sort of stated as if 20 there were a loss and -- or if -- if they -- well, the 21 loss depends -- if there was a loss it would be in '09. 22 But the FTB wouldn't allow the deduction because they 23 hadn't produced evidence to establish their basis in the 24 partnership -- or in the -- 25 MS. STEEL: 2009? That -- that's not what I 26 heard. 27 MR. HORTON: Ms. -- Ms. Yee is -- has the -- 28 MS. YEE: Well, I -- I think the motion as I 7 1 just stated it would cover it. I mean, there'd have to 2 be verification on the basis regardless. So I don't 3 think that -- 4 MR. AMBROSE: Right. 5 MS. YEE: -- the FTB was prepared to go there 6 today. 7 MS. MANDEL: And we don't -- 8 MR. AMBROSE: Yeah. 9 MS. MANDEL: -- we don't have 2009 in front of 10 us. 11 MS. YEE: We don't. 12 MR. AMBROSE: No. 13 MS. YEE: But -- but the Board can find that we 14 can attribute that loss to 2009 and then have -- I mean 15 it's basically direction back to the Franchise Tax Board 16 to then determine and verify the basis. 17 I guess that's -- 18 MR. AMBROSE: I honestly don't -- I don't know 19 the answer to that or -- or what the effect of that 20 would be. I'm -- I'm sorry. 21 MS. YEE: Okay. 22 MR. AMBROSE: Maybe -- maybe Mr. Thompson 23 has -- 24 MR. THOMPSON: You know, I don't -- 25 MR. AMBROSE: -- thought about it. 26 MR. THOMPSON: -- think I've seen us do that. 27 I guess it makes us a little nervous since 2009, 28 although it's referenced and relevant as it relates to 8 1 2004 -- 2 MS. YEE: Uh-huh. 3 MR. THOMPSON: -- we don't have all the facts 4 regarding it. And that -- I think that's why maybe Mr. 5 Ambrose and I are hesitating a little bit. 6 MS. YEE: Okay. So you don't believe that 2009 7 is even properly before us even with the condition about 8 verification of the basis? 9 MR. THOMPSON: Right. I think the safer thing 10 would be to rule on 2004. 11 MS. YEE: Uh-huh. 12 MR. THOMPSON: And -- 13 MS. YEE: And then direction back to FTB to 14 look at -- 15 MR. THOMPSON: Yeah. 16 MS. YEE: -- 2009? 17 MR. HORTON: Members, I'm -- I'm -- I'm 18 actually comfortable giving FTB direction as opposed to 19 having them return back to us after considering 2009. 20 The evidence before us I really don't think will change 21 anything. The basis for the deduction that they took in 22 2008 and 2004 is a reality. So for the Board to give 23 direction that we are -- we believe that the deduction 24 should have taken place in 2009 and that we believe that 25 the million dollar is the millions -- the -- the full 26 amount is the amount subsequent to the adjustment of 27 whatever the -- the base that was recorded and reported 28 should be sufficient direction. 9 1 MS. MANDEL: I think the taxpayer would have to 2 file an amended return -- 3 MS. YEE: Okay. 4 MS. MANDEL: -- for 2009 to be able to even 5 claim it in 2009. If the Board wants to say in -- in 6 denying it for 2004 that part of the reason for that is 7 that they don't think that the worthlessness was until 8 2009, then you're deciding 2004 and indicating that you 9 think it was 2009. 10 I thought I heard FTB say the earliest it -- I 11 mean certainly nothing was going on presumably after 12 2009, after they lost the arbitration. 13 MR. AMBROSE: Uh-huh. 14 MS. MANDEL: But -- 15 MR. AMBROSE: Yeah. As I -- I mean, it seems 16 to me the -- the taxpayer wants '04. I mean, they 17 specifically, you know, elected -- not elected but, you 18 know, that's what they're claiming. 19 So, to grant -- I guess to grant the petition 20 or to grant the deduction with respect to '09, I -- I 21 think I agree with Ms. Mandel. I mean, it just kind of 22 seems like they'd have to file an -- 23 MS. MANDEL: Well -- 24 MR. AMBROSE: -- amended return so that we'd be 25 able to determine at that point what they're claiming. 26 Does that sound right? 27 MS. MANDEL: Well, F -- I don't think FTB's -- 28 you know, we don't -- 2009 as a year is not before the 10 1 Board, so I don't -- personally, I don't think we have 2 jurisdiction over 2009 to make any determination of 3 2009. 4 MR. AMBROSE: Okay. Yeah. 5 MS. MANDEL: And I don't think without an 6 amended return that FTB is just going to make an 7 adjustment if the person hasn't -- hasn't claimed it for 8 2009. 9 And I don't -- 10 MR. HORTON: And I would -- I would agree with 11 Ms. Mandel, but again I would refer back to the Board 12 simply providing direction to the FTB as it relates to 13 that. 14 Obviously, I mean the -- the taxpayer is going 15 to claim the deduction at -- at -- when they believe 16 that they can legally do it. The Board is making the 17 determination that 2004 is not when the loss actually 18 occurred but indicating that we do believe a loss did 19 occur and that it did occur in 2009 and that it should 20 be -- that should be taken under consideration whenever 21 the 2009 return or amendment thereof is processed. 22 MR. RUNNER: Mr. Chair, I think the concern 23 that I have of trying to -- for us to pick a date is I 24 never heard the taxpayer say that's what he wanted, in 25 that sense. 26 And I -- and I never heard a dispute that there 27 was not a certain time other than obviously -- well, at 28 least the discussion wasn't by FTB that starting in 2009 11 1 it was eligible for -- for a loss. The issue then was a 2 dispute about how much. And that was to have to then be 3 an issue to which that taxpayer would have to deal with. 4 So I -- I'm -- I'm a little hesitant about 5 trying to give the taxpayer something that they haven't 6 asked for in a year that they haven't asked for it. 7 Because I don't know what the -- I don't what the 8 implications of those are on that taxpayer. So that's 9 my only -- only concern. 10 I hate to do -- 11 MR. HORTON: We really -- 12 MR. RUNNER: I hate to be trying to do 13 something good for somebody and then all of a sudden 14 find out that doesn't help them in their tax planning or 15 in their work or however it is that they deal with their 16 taxes. 17 MR. HORTON: Yeah, we -- we can't. I -- I -- 18 as Ms. Mandel has pointed out it's not within our 19 purview because it's not the matter before us. So we 20 don't have jurisdiction at this point until the 2009 21 return is brought before us. 22 I think what we're suggesting to do is to 23 provide some direction to the Franchise Tax Board and 24 the taxpayer. And it's simple at this point no more 25 than advice from the Board. 26 MS. STEEL: That's what I was thinking, we just 27 give direction and recommendations, then it doesn't have 28 to come back to us for 2009 when taxpayer asked for 12 1 deductions or refund on 2009. That's why I wanted to 2 mention it so this case doesn't have to come here. And 3 then taxpayer knows. 4 Because Franchise Tax Board already said that 5 if he wants to claim it it's 2009. So this is kind of 6 recommendation and direction at this point. 7 MR. HORTON: Okay. So the motion at this point 8 is to sustain the FTB with advice from the Board 9 relative to the potential deduction in 2009. 10 MS. YEE: I think -- 11 MR. RUNNER: Well -- 12 MS. YEE: -- the motion was Ms. Steel's motion, 13 which was to attribute the million dollar loss to the 14 2009 tax year. 15 MR. RUNNER: Well, inherent in that motion is 16 to deny it in 2004, correct? 17 MS. YEE: May -- may I take a shot at a 18 substitute motion because I think there's two parts to 19 this and I want to be clear about what we're doing. 20 I will move to sustain the Franchise Tax Board 21 and deny this appeal, but to direct the Franchise Tax 22 Board to examine the appropriateness of -- of 23 attributing the million dollar loss to the 2009 tax 24 year, or maybe it's another year -- I mean 2009 being 25 the earliest. Could be another year. -- on their -- 26 on -- on appellant's 2009 tax return or -- or any other 27 appropriate year. And obviously subject to all that 28 they have to do to verify the tax basis. 13 1 MS. MANDEL: I -- I -- I can't join that 2 because I don't think they have to look at anything 3 unless an amended return comes in. The taxpayer might 4 decide, based on facts the taxpayer knows that maybe we 5 didn't have today because the taxpayer's going for 2004 6 that there was something about the arbitration that 7 maybe they -- they like 2008 for some factual reason. 8 I don't know, maybe they like 2009. Maybe -- 9 MS. STEEL: And we can give 2008 -- 10 MS. MANDEL: I don't know. But they have to 11 file an amended return. And if they file an amended 12 return for an appropriate -- you know, FTB will -- 13 MS. YEE: Is -- is the issue the -- ascribing 14 the loss to a particular year other than 2004? 15 MR. HORTON: One -- Mr. Thompson seems to -- 16 MR. THOMPSON: Well, I was just gonna -- 17 maybe -- maybe this is picking up on Senator Runner's 18 point. If we have some kind of direction in there, I 19 would hate to see an issue come up later where the 20 taxpayer is saying, look, actually, you know, now that I 21 looked into it farther we think this occurred in '08 or 22 2010. And then, you know, FTB perhaps saying, no, no, 23 no, the Board's already decided this; you're -- you're 24 estopped. You know, that's -- that's already been 25 flushed out. And I don't know how it would play out but 26 it sounds messy. 27 And so I think it -- 28 MS. YEE: Okay. 14 1 MR. THOMPSON: -- again -- 2 MS. YEE: I'll -- and I'll -- 3 MS. MANDEL: And I don't know if it's a million 4 dollars it's adjusted basis. I don't know what that is. 5 MS. YEE: I understand. I'll unmess it for 6 you. 7 MS. MANDEL: I mean, I'm only one, but -- 8 MS. YEE: No, no, no, I -- 9 MS. MANDEL: -- it's too messy for me. 10 MS. YEE: -- I -- I get this. I get -- I think 11 we're trying to be efficient without a lot of 12 information. So, let me make a substitute motion to 13 sustain the Franchise Tax Board and to deny this appeal. 14 May we have the direction to the Franchise Tax Board not 15 be part of the motion? Can you communicate direction 16 that's not embedded in the motion, itself -- 17 MR. HORTON: Yes. 18 MS. YEE: -- to then determine -- 19 MR. AMBROSE: We can ask them to watch this 20 discussion. 21 MS. YEE: Yeah. 22 MR. HORTON: Well -- 23 MS. YEE: That will help. 24 MR. RUNNER: That will make them understand it. 25 MR. HORTON: Oh, they're -- they're here, so -- 26 MS. YEE: But the direction would be then to -- 27 to go back and determine with the appellant when it may 28 be appropriate for them to claim a loss deduction, given 15 1 facts that were presented today. 2 MR. AMBROSE: I don't -- I'd have to look at 3 the rules for tax appeals. I'm sorry, I don't mean to 4 be disagreeable -- 5 MS. YEE: No, that's okay. 6 MR. HORTON: No -- no -- 7 MS. YEE: That's okay. I want to do this 8 right. 9 MR. HORTON: -- no problem at all. 10 So the motion is to sustain the Franchise Tax 11 Board and with hopes that the Franchise Tax Board is 12 paying attention, that the Members of the Board believe 13 that a loss did occur and that the loss is the million 14 dollars with some adjusted basis -- 15 MS. YEE: Well -- 16 MR. HORTON: -- in fact, that the --- 17 MS. YEE: A loss of some amount. 18 MR. HORTON: -- that the -- I mean, with the 19 adjusted -- given the adjusted basis but -- I mean, the 20 taxpayer actually claimed the loss in 2008 so we 21 could -- 22 MS. MANDEL: That's when they amended the 23 '04 -- 24 MS. YEE: That's a -- 25 MS. STEEL: -- just in the future. 26 MS. YEE: Right. 27 MR. HORTON: Yeah. So, I mean at a -- at a 28 minimum in 2008 prior to the adjudication they 16 1 acknowledge that a loss had occurred. 2 MS. MANDEL: He might have been worried about 3 the statute running. 4 MR. HORTON: That's still with the -- still is 5 outside of our -- out -- yeah, it could have been, 6 outside our purview. 7 Okay, Members. Ms. Yee, the floor is yours. 8 MS. MANDEL: Is that a -- is that a split 9 motion? 10 MS. YEE: No, actually -- 11 MR. HORTON: No, it's -- 12 MS. YEE: -- my motion is very simple. 13 MR. HORTON: -- simple. 14 MS. YEE: Sustain the Franchise Tax Board and 15 deny the appeal, period. Then the direction is not part 16 of the motion, which is to direct the Franchise Tax 17 Board to look at when, if any, tax year a loss deduction 18 would be applied. 19 MR. HORTON: There you go. 20 MS. STEEL: Okay. 21 MR. HORTON: Is there a second? 22 Ms. Steel seconds. 23 Further discussion, Members? 24 Hearing none, such will be the order. 25 MR. RUNNER: I'm sorry, apologize -- 26 MR. HORTON: I'm sorry, Mr. Runner. 27 MR. RUNNER: I have an objection. So -- 28 MR. HORTON: Mr. Runner objects. 17 1 MS. MANDEL: Yeah, I can join a motion to 2 sustain the Franchise Tax Board. This other stuff is 3 just getting a little convoluted for me. 4 MS. YEE: No, it's just direction; it's not 5 part of the motion. But I think it -- what I'm trying 6 to do is to give F -- 7 MR. HORTON: We're okay, Ms. Yee. 8 MS. YEE: All right. 9 MR. HORTON: I mean at this point -- 10 MS. YEE: Okay. 11 MR. HORTON: -- it's -- it's out there. It's 12 pretty clear. 13 MS. YEE: All right. I hope it's clear. 14 MR. HORTON: I believe Franchise Tax Board 15 has -- has a pretty good idea where we're going. 16 So, Ms. Olson, please call the roll. 17 MS. OLSON: Mr. Horton. 18 MR. HORTON: Aye. 19 MS. OLSON: Ms. Steel. 20 MS. STEEL: Aye. 21 MS. OLSON: Mr. Runner. 22 MR. RUNNER: No. 23 MS. OLSON: Ms. Yee. 24 MS. YEE: Aye. 25 MS. OLSON: Ms. Mandel. 26 MS. MANDEL: So the motion is going to be 27 recorded as sustain Franchise Tax Board; that's what I'm 28 voting on? 18 1 MR. HORTON: Yes, ma'am. 2 MS. STEEL: With the direction. But it's only 3 direction. 4 MS. YEE: The direction is not part of the 5 motion; it's part of the discussion. 6 MS. MANDEL: Okay, so I'm voting -- 7 MS. STEEL: You know -- 8 MS. MANDEL: -- aye on a motion to sustain the 9 Franchise Tax Board? 10 MR. HORTON: She -- you're on the record, Ms. 11 Mandel. 12 MS. MANDEL: Okay, thank you. 13 MR. HORTON: Okay. 14 ---oOo--- 15 16 17 18 19 20 21 22 23 24 25 26 27 28 19 1 ITEM B5. 2 MR. HORTON: Next item, Ms. Olson. 3 MS. OLSON: Our next item is B5, Gerald A. 4 Hutchinson. 5 MR. HORTON: Is there a motion, Members? 6 MS. YEE: Move to sustain the Franchise Tax 7 Board. 8 MR. HORTON: It's been moved by Ms. Yee to 9 sustain the Franchise Tax Board. Is there a second? 10 MS. MANDEL: Second: 11 MR. HORTON: Second by Ms. Mandel. 12 Objection, Members? 13 Hearing none, such will be the order. 14 ---oOo--- 15 16 17 18 19 20 21 22 23 24 25 26 27 28 20 1 ITEM B6. 2 MS. OLSON: Our next item is B6, Myers Power 3 Products, Incorporated. 4 MR. HORTON: Is there a motion, Members? 5 MR. RUNNER: Move to sustain. Oh, excuse 6 me -- 7 MR. HORTON: Moved by Mr. Runner to sustain. 8 Is there a second? Second by Ms. Yee -- 9 Objection, Members? 10 MR. RUNNER: I withdraw that. 11 MS. YEE: I'll make the motion. 12 MR. RUNNER: -- to claim the refund. 13 MS. YEE: Is that a motion to grant? Okay. 14 MR. RUNNER: Yes. 15 MR. HORTON: The motion is to grant? 16 MR. RUNNER: Grant the refund. 17 MR. HORTON: It's been moved to grant by Mr. 18 Runner. Is there a second? 19 MS. STEEL: Second. 20 MR. HORTON: Second by Ms. Steel. 21 MS. YEE: Objection. 22 MR. HORTON: Objection by Ms. Yee. 23 Ms. Olson, please call the roll. 24 MS. OLSON: Mr. Horton. 25 MR. HORTON: No. 26 MS. OLSON: Ms. Steel. 27 MS. STEEL: Aye. 28 MS. OLSON: Mr. Runner. 21 1 MR. RUNNER: Aye. 2 MS. OLSON: Ms. Yee. 3 MS. YEE: No. 4 MS. OLSON: Ms. Mandel. 5 MS. MANDEL: No. 6 MS. OLSON: Motion fails. 7 MR. HORTON: Subsequent motion, Members? 8 MS. YEE: Move to sustain the Franchise Tax 9 Board. 10 MR. HORTON: Moved by Ms. Yee to sustain. 11 Second by Ms. -- 12 MS. MANDEL: Yeah. 13 MR. HORTON: -- Mandel. 14 MS. STEEL: Objection. 15 Objection so noted. Ms. Olson, please call the 16 roll. 17 MS. OLSON: Mr. Horton. 18 MR. HORTON: Aye. 19 MS. OLSON: Ms. Steel. 20 MS. STEEL: No. 21 MS. OLSON: Mr. Runner. 22 MR. RUNNER: No. 23 MS. OLSON: Ms. Yee. 24 MS. YEE: Aye. 25 MS. OLSON: Ms. Mandel. 26 MS. MANDEL: Aye. 27 MS. OLSON: Motion carries. 28 ---oOo--- 22 1 ITEM B8 2 MS. OLSON: Our next item is B8, Sean S. 3 Niknafs and Sima Mirhashemi. 4 Is there a motion, Members? 5 MS. YEE: I'll move to sustain the Franchise 6 Tax Board. 7 MR. HORTON: It's been moved by Ms. Yee to 8 sustain the Franchise Tax Board. Is there a second? 9 MS. MANDEL: Second. 10 MR. HORTON: Second by Ms. Mandel. 11 Objection, Members? 12 Objection so noted. 13 Ms. Olson, please call the roll. 14 MS. OLSON: Mr. Horton. 15 MR. HORTON: Aye. 16 MS. OLSON: Ms. Steel. 17 MS. STEEL: No. 18 MS. OLSON: Mr. Runner. 19 MR. RUNNER: Aye. 20 MS. OLSON: Ms. Yee. 21 MS. YEE: Aye. 22 MS. OLSON: Ms. Mandel. 23 MS. MANDEL: Aye. 24 MS. OLSON: Motion carries. 25 ---oOo--- 26 27 28 23 1 ITEM B9. 2 MS. OLSON: Our next item is B9, 3 State-of-othe-Art Technologies, Incorporated. 4 MR. HORTON: Is there a motion, Members? 5 MS. YEE: Move to sustain the Franchise Tax 6 Board. 7 MR. HORTON: It's been moved by Ms. Yee to 8 sustain the Franchise Tax Board. 9 Second by -- 10 MS. YEE: Second. 11 MR. HORTON: -- Ms. Mandel. 12 Objection, Members? 13 MS. STEEL: Ms. Ewing, can I just ask you one 14 thing, that -- so all the penalty's been returned -- 15 refunded to the taxpayer and then only accuracy, right? 16 MR. HORTON: One -- what -- one second. Why 17 don't we have the Department respond to that. 18 MS. YEE: Appeals. 19 MS. STEEL: Appeals. 20 MR. HORTON: Appeals, please. 21 MR. THOMPSON: That's correct. You said -- the 22 only thing related -- left is the accuracy-related 23 penalty; that's correct. 24 MR. HORTON: Further discussion, Members? 25 Hearing none, it's been moved and second to 26 sustain the Franchise Tax Board. 27 Objection? 28 Hearing none, such will be the order. 24 1 ---oOo--- 2 ITEM B12 3 MS. OLSON: Our next item is B12, Bill Kells. 4 This was a non -- no appearance. 5 MR. HORTON: Noting non-appearance, is there a 6 motion, Members? 7 MS. YEE: Move to sustain the Franchise Tax 8 Board. 9 MR. HORTON: It's been moved to sustain the 10 Franchise Tax Board by Ms. Yee. Second by Ms. Steel. 11 Objection, Members? 12 Without objection such will be the order. 13 ---oOo--- 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 25 1 ITEM B14. 2 MS. OLSON: Our next item is B14, Charles E. 3 Kohlhase. 4 MR. RUNNER: Move to grant. 5 MR. HORTON: It's been moved to grant by Mr. 6 Runner. Second by -- 7 MS. STEEL: Second. 8 MR. HORTON: -- Ms. Steel. 9 Objection? 10 MS. YEE: Objection -- 11 MS. MANDEL: Oh. 12 MS. YEE: -- reluctantly, yes. 13 MR. HORTON: Objection by Ms. Yee and Ms. 14 Mandel. 15 Ms. Olson, please call the roll. 16 MS. OLSON: Mr. Horton. 17 MR. HORTON: No. 18 MS. OLSON: Ms. Steel. 19 MS. STEEL: Aye. 20 MS. OLSON: Mr. Runner. 21 MR. RUNNER: Aye. 22 MS. OLSON: Ms. Yee. 23 MS. YEE: No. 24 MS. OLSON: Ms. Mandel. 25 MS. MANDEL: No. 26 MR. HORTON: Subsequent motion? 27 MS. YEE: Move to -- 28 MR. HORTON: Moved by Ms. Yee, second by Ms. 26 1 Mandel to sustain the Franchise Tax Board. 2 Objection? 3 MR. RUNNER: Yeah. 4 MR. HORTON: Hearing none -- 5 MR. RUNNER: Yes. 6 MS. STEEL: Objection. 7 MR. RUNNER: Yes. 8 MR. HORTON: Objection by Mr. Runner -- 9 MR. HORTON: Must be getting hungry. 10 MS. STEEL: Me, too, yeah. 11 MR. HORTON: -- and Ms. Steel. 12 Ms. Olson, please call the roll. 13 MS. OLSON: Mr. Horton. 14 MR. HORTON: Aye. 15 MS. OLSON: Ms. Steel. 16 MS. STEEL: No. 17 MS. OLSON: Mr. Runner. 18 MR. RUNNER: No. 19 MS. OLSON: Ms. Yee. 20 MS. YEE: Aye. 21 MS. OLSON: Ms. Mandel. 22 MS. MANDEL: Aye. 23 MS. OLSON: Motion carries. 24 ---oOo--- 25 26 27 28 27 1 REPORTER'SCERTIFICATE 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 June 21, 2011 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 27 13 pages constitute a complete and accurate transcription 14 of the shorthand writing. 15 16 Dated: July 1, 2011. 17 18 19 ____________________________ 20 BEVERLY D. TOMS 21 Hearing Reporter 22 23 24 25 26 27 28 28