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 APRIL 25, 2012 10 11 12 13 14 15 FINAL ACTIONS 16 17 18 19 20 21 22 23 REPORTED BY: JULI PRICE JACKSON 24 CSR NO. 5214 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 Michelle Steel 5 Vice-Chairwoman 6 Betty T. Yee Member 7 George Runner 8 Member 9 Marcy Jo Mandel Appearing for John Chiang 10 State Controller (per Government Code 11 Section 7.9) 12 Joann Richmond Chief, Board 13 Proceedings Division 14 15 ---OOO--- 16 17 For Staff: David Levine Tax Counsel 18 19 ---o0o--- 20 21 22 23 24 25 26 27 28 2 1 5901 GREEN VALLEY CIRCLE 2 CULVER CITY, CALIFORNIA 3 APRIL 25, 2012 4 ---o0o--- 5 MR. HORTON: Welcome back to the meeting of the 6 Board of Equalization. 7 Ms. Richmond cases. What is our next item? 8 MS. RICHMOND: Our next item is C7, Kamal 9 Noorzady. It was a waived appearance. 10 ---o0o--- 11 C7 KAMAL NOORZADY 12 NO. 509930 (EH) 13 ---o0o--- 14 MR. HORTON: Discussion, Members? 15 Hearing none, is there a motion? 16 MS. YEE: Move to redetermine and advise 17 Petitioner of the offers-in-compromise program. 18 MR. HORTON: It's been moved by Member Yee to 19 redetermine, with advice to the Petitioner on the 20 offers-in-compromise. 21 Is there a second? 22 MS. STEEL: Second. 23 MR. HORTON: Second by Member Steel. 24 Without objection, such will be the order. 25 ---o0o--- 26 27 28 3 1 MR. HORTON: Ms. Richmond. 2 MS. RICHMOND: Our next item is C10, LR Auto, 3 Incorporated. It was also a waived appearance. 4 MR. HORTON: Discussion, Members? 5 Is there a motion? 6 MS. STEEL: I want to adopt the staff 7 recommendation but direct staff to collect the tax 8 amount from the predecess -- the seller of the company. 9 I heard that that seller was paying $175 per 10 month, right, Mr. Levine? 11 MR. LEVINE: I don't recall that, but -- 12 MS. STEEL: Yeah. 13 MR. LEVINE: That's not going to pay it too 14 fast. 15 MS. STEEL: Well, that was the payment plan. 16 So, we want to collect from the taxpayer that who owes 17 us first and then we can go after this taxpayer. 18 MR. HORTON: Mr. Levine. 19 MR. LEVINE: Just to -- if it's you want the 20 Department to wait until the -- 21 MS. STEEL: No, no, no, not wait, but, you 22 know, try to -- 23 MR. LEVINE: -- make best efforts to -- 24 MS. STEEL: -- yeah, yeah -- 25 MR. LEVINE: -- collect against the -- 26 MS. STEEL: -- collect from the -- yeah. 27 MR. LEVINE: -- original taxpayer. 28 MS. STEEL: I have one question. 4 1 If successor's liability that when seller had 2 the fraud charges, does that go down to the buyer? 3 MR. LEVINE: Fraud? 4 MS. STEEL: Charges? 5 MR. LEVINE: No -- the Board's regulation 6 allows relief of all penalties if there's no relation in 7 the successor liability where there's no relationship 8 between the successor and the predecessor. 9 Like it wasn't a part owner or a responsible 10 person. 11 MS. STEEL: Okay, that's my only question. 12 MR. HORTON: Okay. Moved by Member Steel to 13 adopt staff recommendation, with directions to staff to 14 make best efforts to collect from the seller, second by 15 Member Yee. 16 Objection? Noting none, such will be the 17 order. 18 ---o0o--- 19 20 21 22 23 24 25 26 27 28 5 1 MR. HORTON: Ms. Richmond. 2 MS. RICHMOND: Our next item is C11, Highline 3 Specialist Corporation. 4 ---o0o--- 5 C11 HIGHLINE SPECIALIST CORPORATION 6 NO. 468309 (EA) 7 ---o0o--- 8 MR. HORTON: Discussion Members? 9 Mr. Runner. 10 MR. RUNNER: Yeah, I mean I'd like to see if 11 there's another -- I'm -- the -- obviously, the issue 12 here is the assumption of -- you know, of 400 days on 13 behalf of the staff and 22 days, or whatever, on behalf 14 of the taxpayer. And I'm wondering in there's a formula 15 out there that gets us somewhere in between? 16 Because, clearly, you know, it seemed to me 17 during the audit if, indeed, we thought there were more 18 rentals than what -- than what the -- at least there 19 should have been indications in those jackets, the same 20 place we got some of that other information that would 21 indicate that there was actually that many rentals. 22 MS. STEEL: I can suggest -- 23 MR. RUNNER: Okay. 24 MS. STEEL: So, 22 times -- for two days, so, 25 it's going -- it's 44. And three years, so, it's 132. 26 MR. RUNNER: So, 132 days -- 27 MS. STEEL: Days. 28 MR. RUNNER: -- of rental? 6 1 MS. STEEL: Right. 2 MR. RUNNER: If we use the day -- if we use 132 3 days of rental, what is that -- how do we calculate the 4 tax due? 5 Because I think the tax due was calculated on a 6 percentage of the -- right? Help me. 7 MR. LEVINE: It's fair rental value. I -- if 8 you're going -- if you conclude that the tax is due 9 based on the 130 days of use, you would just figure out 10 what the fair rental value is per day. 11 They argued 20, State pays for, at least my 12 car, I think it's $33 a day, seems like somewhere in 13 that range is -- 14 MR. HORTON: Okay, Mr. Runner -- Mr. Runner 15 moves to reduce the per day calculation from 400, as 16 indicated by the Department, down to 132 days and to 17 reject the fair rental value on -- direct the Department 18 to project fair rental value at 132 days. 19 Is there a second? 20 MS. STEEL: Second. 21 MR. HORTON: Second by Member Steel. 22 Objection? 23 MR. RUNNER: Did we get a rate in there? 24 MR. HORTON: None noted. 25 MR. RUNNER: Can I just make it clear if 26 they've got the -- if they know the number? 27 MR. LEVINE: I don't have a number. 28 MS. STEEL: They already got -- 7 1 MR. LEVINE: If I was going to pick one, I'd 2 think that -- 3 MR. HORTON: Members, I don't know that it's 4 necessary to manage the Department to that degree. 5 MS. YEE: Right. 6 MR. HORTON: There's a motion and a second. 7 With no objection noted, such will be the 8 order. 9 MR. RUNNER: Okay. 10 MS. STEEL: Thank you. 11 ---o0o--- 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 8 1 MR. HORTON: Ms. Richmond. . 2 MS. RICHMOND: Our next item is C12, David 3 Bryan Royal. 4 ---o0o--- 5 C12 DAVID BRYAN ROYAL 6 NO. 515517 (AC) 7 ---o0o--- 8 MR. HORTON: Discussion, Members? Is there a 9 motion? 10 Member Mandel. 11 MS. MANDEL: Oh, this is C12. 12 MR. RUNNER: This is the caterer. 13 MS. MANDEL: Yeah, this is a redetermine and 14 offer-in-compromise. 15 MR. RUNNER: Uh-huh. 16 MS. STEEL: Second. 17 MS. YEE: Second. 18 MR. HORTON: So moved. Second by Member Steel. 19 Without objection, such will be the order. 20 ---o0o--- 21 22 23 24 25 26 27 28 9 1 MS. RICHMOND: Our next item is C14, John M. 2 Young. 3 ---o0o--- 4 C14 JOHN M. YOUNG 5 NO. 446018 (UT) 6 ---o0o--- 7 MR. HORTON: Discussion, Members? Is there a 8 motion? 9 Ms. Mandel. 10 MS. MANDEL: I understand his frustration, but 11 it seems that the documents altogether sort of put him 12 there. So, move to redetermine. 13 MR. HORTON: Move to redeter -- Ms. Mandel 14 moves to redetermine. Second by Member Yee. 15 Without objection? 16 MR. RUNNER: Objection. 17 MS. STEEL: Objection. 18 MR. HORTON: Objection noted. 19 Ms. Richmond, please call the roll. 20 MS. RICHMOND: Mr. Horton. 21 MR. HORTON: Aye. 22 MS. RICHMOND: Ms. Steel. 23 MS. STEEL: No. 24 MS. RICHMOND: Mr. Runner. 25 MR. RUNNER: No. 26 MS. RICHMOND: Ms. Yee. 27 MS. YEE: Aye. 28 MS. RICHMOND: Ms. Mandel. 10 1 MS. MANDEL: Aye. 2 MS. RICHMOND: Motion carries. 3 ---o0o--- 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 11 1 MR. HORTON: Ms. Richmond. . 2 MS. RICHMOND: Our next item is C15, HK 3 Cuisine, Inc. 4 ---o0o--- 5 C15 HK CUISINE, INC. 6 NO. 522224 (EH) 7 ---o0o--- 8 MS. STEEL: I have a motion. 9 MR. HORTON: Discussion, Members? 10 Is there a motion? 11 MS. STEEL: Adopt the staff recommendation 12 except that $24,000 of four checks that issued to the 13 owner. 14 MR. HORTON: Is there a second? 15 MR. RUNNER: I'll second. Let me -- I'd like 16 to see what the -- how that adjusts tax. 17 MR. LEVINE: The unreported taxable sales is 18 149,000, so, this will reduce it by about a sixth. 19 MR. RUNNER: Okay. 20 MR. HORTON: Discussion, Members? 21 That's not a discussion. 22 MR. LEVINE: That's pretty. 23 MS. MANDEL: So -- okay. 24 MR. HORTON: Discussion, Members? 25 Ms. Mandel. 26 MS. MANDEL: So, the assertion is that the 27 entire amount of those checks is for tips? 28 MR. HORTON: Yes, I mean, I would say so -- not 12 1 that I'm making that assertion, I'm just -- 2 MS. MANDEL: No, I'm just -- 3 MR. HORTON: -- clarifying. 4 MS. MANDEL: Trying to -- thank you. 5 MR. HORTON: Discussion, Members? 6 Mr. Runner makes a motion to adopt -- I mean, 7 Ms. Steel makes a motion to adopt staff recommendation 8 with the adjustment of the four payroll checks. 9 Mr. Runner seconds. 10 Objection, Members? 11 Hearing none, such will be the order. 12 ---o0o--- 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 13 1 MR. HORTON: Ms. Richmond. 2 MS. RICHMOND: Item C16 is put over to tomorrow 3 while Board Proceedings tries to reach the taxpayer or 4 their representative. 5 ---o0o--- 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 14 1 . 2 REPORTER'S CERTIFICATE 3 4 State of California ) 5 ) ss 6 County of Sacramento ) 7 8 I, JULI PRICE JACKSON, Hearing Reporter for the 9 California State Board of Equalization certify that on 10 APRIL 25, 2012 I recorded verbatim, in shorthand, to the 11 best of my ability, the proceedings in the 12 above-entitled hearing; that I transcribed the shorthand 13 writing into typewriting; and that the preceding pages 1 14 through 14 constitute a complete and accurate 15 transcription of the shorthand writing. 16 17 Dated: MAY 3, 2012 18 19 20 ____________________________ 21 JULI PRICE JACKSON 22 Hearing Reporter 23 24 25 26 27 28 15