Opinion
No. 36298
Decided October 5, 1960.
Taxation — Personal property — Taxpayer "engaged in business," when — Leasing store equipment to retail merchant.
APPEAL from the Board of Tax Appeals.
The appellant is a corporation dealing in the rental of store fixtures to a retail business establishment. On April 13, 1956, it accepted the assignment of a lease by which it agreed to lease store equipment to the lessee, a retail department store, for rental payments to begin on February 4, 1957, at which time appellant was to deliver the leased equipment to the lessee. From and after September 1956, appellant began to acquire and build up an inventory of store equipment which was to be delivered to the lessee in February 1957. On January 1, 1957 (tax listing day), it maintained an inventory of store equipment for leasing, but at that time none of the equipment had been installed, and the building in which such equipment was to be used was still in the process of construction.
On February 4, 1957, the building was completed, the appellant transferred possession of the leased store equipment to the lessee, and rental payments for such equipment began from that date.
The Tax Commissioner found that the appellant "was not a taxpayer engaged in business until it had acquired the property it intended to lease and was entitled to receive a rent therefrom" and, holding that the property was therefore taxable at 70 per cent of its value, increased the personal property tax assessment for 1957 accordingly.
The Board of Tax Appeals, on appeal, affirmed the final order of the commissioner, holding that the commissioner did not err in determining that the appellant did not become "engaged in business" until February 4, 1957, and that all its business activity prior to that date was but preparatory to engaging in the business intended to be pursued by it thereafter.
An appeal from the decision of the Board of Tax Appeals brings the cause to this court for review.
Messrs. Dargusch, Saxbe Dargusch and Mr. Jack H. Bertsch, for appellant.
Mr. Mark McElroy, attorney general, and Mr. Joseph D. Karam, for appellee.
The question presented is whether the appellant became a taxpayer engaged in business on April 13, 1956, when it became obligated under the lease to deliver store equipment to the lessee at a future date, or on December 31, 1956, when it had acquired and was holding a working inventory of equipment for leasing, or on February 4, 1957, when possession of the equipment was transferred to the lessee and rental payments began, in accordance with the agreement.
From an examination of the record in this case, this court is of the opinion that the decision of the Board of Tax Appeals, holding that appellant became a taxpayer engaged in business on February 4, 1957, is not unreasonable or unlawful. The decision is, therefore, affirmed.
Decision affirmed.
WEYGANDT, C.J., ZIMMERMAN, BELL, HERBERT and PECK, JJ., concur.
TAFT, J., dissents. See Schott Auction Co. v. Bowers, Tax Commr., 167 Ohio St. 321.
MATTHIAS, J., dissents.