1 BEFORE THE CALIFORNIA STATE BOARD OF EQUALIZATION 2 450 N STREET 3 SACRAMENTO, CALIFORNIA 4 5 6 7 REPORTER'S TRANSCRIPT 8 DECEMBER 15, 2012 9 10 FINAL ACTIONS 11 12 13 14 15 16 17 18 19 Reported by: Juli Price Jackson 20 No. CSR 5214 21 22 23 24 25 26 27 28 1 1 P R E S E N T 2 3 For the Board Jerome E. Horton of Equalization: Chairman 4 5 Michelle Steel Vice-Chairwoman 6 7 Betty T. Yee Member 8 9 Marcy Jo Mandel Appearing for John 10 Chiang, State Controller (per 11 Government Code Section 7.9) 12 13 Diane G. Olson Chief, Board 14 Proceedings Division 15 16 17 ---oOo--- 18 For Staff: Anthony Epolite Tax Counsel 19 20 ---o0o--- 21 22 23 24 25 26 27 28 2 1 450 N STREET 2 CULVER CITY, CALIFORNIA 3 DECEMBER 15, 2012 4 ---oOo--- 5 MR. HORTON: Ms. Olson? 6 MS. OLSON: Our next are those items that have 7 been taken under submission. 8 *** THIS PARAGRAPH WAS CORRUPT; TEXT REMOVED. *** 9 MR. HORTON: Why don't we take a couple of minutes 10 break? 11 (Whereupon there was a brief recess.) 12 MR. HORTON: Ms. Olson? 13 MS. OLSON: Our next item is C4, Bear Data 14 Solutions, Incorporated. 15 ---o0o--- 16 C4 BEAR DATA SOLUTIONS, INC. 17 NO. 521430 (GH) 18 ---o0o--- 19 MR. HORTON: Members? 20 MS. MANDEL: Okay, I have a couple of different 21 things on it. I think that I would move the responses 22 based on the documents they brought us today looks like 23 qualifies for sale for resale. The -- that's the one 24 that I think was done on an actual basis. 25 The Applied Biosystems, there were three 26 invoices, but one of them is the one that has to do with 27 whether it was the construction contract. And, so, on 28 that one they really -- I'd do a 30-30-03 so they could 3 1 get the contract and see and then also see if any of the 2 amount was really for labor. 3 And I think that's what I had. So, that would 4 be the combo -- the combo motion. 5 MR. HORTON: So -- 6 MS. STEEL: Can you -- 7 MS. MANDEL: Restate it? 8 MR. HORTON: Yes, please? 9 MS. MANDEL: Okay. The responses, which was 10 the one where the equipment was immediately shipped to 11 the UK subsidiary and through an intercompany transfer 12 and where the e-mail came from just two days ago the 13 general counsel saying that the UK sub was a separate 14 entity, that one would be a qualified sale for resale. 15 MR. HORTON: Okay. 16 MS. MANDEL: That was done by the Department on 17 an actual basis. So, that one does not affect the 18 projection. 19 MR. HORTON: Uh-huh. 20 MS. MANDEL: Applied Biosystems, there was the 21 one -- one of their invoices which looks to be a 22 construction contract, but we'd need to see the 23 contract. There's still a question of whether they 24 really did the installation. The testimony was they 25 did, but they weren't -- staff wasn't persuaded and I 26 guess I'd like to see a little bit more. So, a 30-30-30 27 on -- as to that. 28 And that involved not just whether they really 4 1 did the installation, but, perhaps, some of the dollars 2 was for labor, which staff agrees would get excluded. 3 So they can show that. 4 MR. HORTON: Uh-huh. 5 MS. MANDEL: If that one winds up ultimately -- 6 that would still leave you with then the projection. 7 MR. HORTON: Projection? 8 MS. MANDEL: So, those would be the two things 9 that I saw after the whole discussion. 10 MR. HORTON: Okay, and -- 11 MS. MANDEL: And then the rest would be as 12 staff had it. 13 But since -- since -- I understand staff's 14 explanation about why they would still leave -- leave 15 the -- you know, do the projection. 16 MR. HORTON: And would it be acceptable that 17 instead of bifurcating the two, that we did a 30-30-30 18 and gave directions to staff? 19 MS. MANDEL: Sure. 20 MR. HORTON: So moved. Is there a second? 21 MS. YEE: Second. 22 MR. HORTON: Second by Member -- motion by 23 Member Mandel, second by Member Yee. 24 Without objection, such will be the order. 25 ---o0o--- 26 27 28 5 1 MR. HORTON: Ms. Olson? . 2 MS. OLSON: Our next item is from yesterday, 3 B2, Leprino Foods Company. 4 ---o0o--- 5 B2 LEPRINO FOODS COMPANY 6 NO. 481272 7 ---o0o--- 8 MR. HORTON: Mr. Epolite is here to respond to 9 any questions or concerns, Members. 10 Discussion? 11 MS. STEEL: I learned little more about this 12 transformer things. Did you know we have a transformer 13 inside of our cell too? 14 Only difference here this is so big and they 15 put it outside of the room because fire hazard but they 16 really need it to run that manufacturing machine. 17 And then I think that, you know, MIC is to help 18 manufacturing companies to stay in California. So, I 19 think we should interpret the regu -- the law little 20 more loosely to help manufacturing companies. 21 So, I want to make a motion. 22 MS. YEE: Can we bifurcate the assets -- 23 MR. HORTON: Sure. 24 MS. YEE: -- like we did yesterday? 25 MR. HORTON: So, we're on the electrical 26 transformer asset. 27 MS. STEEL: We're doing one by one? 28 MR. HORTON: Yes. 6 1 MS. YEE: Okay. 2 MR. HORTON: I take that as a motion by Member 3 Steel to -- 4 MS. YEE: To grant. 5 MR. HORTON: -- grant the MIC on the electrical 6 transformer asset. 7 MS. YEE: I'll second that. 8 MR. HORTON: Second by Member Yee. Discussion? 9 Ms. Olson, please call the roll. 10 MS. OLSON: Mr. Horton? 11 MR. HORTON: No. 12 MS. OLSON: Ms. Steel? 13 MS. STEEL: Aye. 14 MS. OLSON: Ms. Yee? 15 MS. YEE: Aye. 16 MS. OLSON: Ms. Mandel? 17 MS. MANDEL: Aye. 18 MS. OLSON: Motion carries. 19 MR. HORTON: Next item is the electrical 20 generator asset. Is there discussion? 21 MS. STEEL: I found out they tried to maintain 22 that cheesemaking machine or that equipment still 23 generator needed to keep running. 24 So, that's my motion -- to grant. 25 MR. HORTON: Ms. Steel makes a motion to grant 26 the MIC. 27 Is there a second? 28 MS. MANDEL: Second. 7 1 MR. HORTON: Second by Ms. Mandel. 2 Objection? Hearing none, such will be the 3 order. 4 And now, Members, the brick and tile covering. 5 Discussion? 6 MS. STEEL: I want to give and help 7 manufacturing companies, but I think it was a little too 8 pushy because they were talking that they can remove it, 9 but they really tightly attach to the surface. 10 So, you know, to me, tile and bricks are not 11 different than windows and other stuffs, so -- 12 sustained. 13 MS. MANDEL: Sustain the FTB? 14 MS. STEEL: Yeah, FTB. 15 MS. YEE: I'll second that. 16 MR. HORTON: Moved by Member Steel to sustain 17 FTB. Second by Member Yee. Objection? 18 Without objection, such will be the order. 19 MR. EPOLITE: Thank you. 20 MR. HORTON: Thank you. 21 ---o0o--- 22 23 24 25 26 27 28 8 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 DECEMBER 15, 2012 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 8 constitute a complete and accurate 14 transcription of the shorthand writing. 15 16 Dated: JANUARY 5, 2012 17 18 19 ____________________________ 20 JULI PRICE JACKSON 21 Hearing Reporter 22 23 24 25 26 27 28 9