Opinion
No. 80-1038
Decided April 15, 1981.
Taxation — Personal property tax — Valuation — "302 Computation" directive — Application — Cause remanded to Board of Tax Appeals, when.
APPEAL from the Board of Tax Appeals.
Towmotor Corporation, appellant herein, is engaged in the manufacture of forklift trucks at a facility in Mentor, Ohio. In computing its personal property tax liability for 1974, 1975, and 1976, appellant depreciated the acquisition cost of its Mentor property at a rate that was based on the useful lives attributed to that property as a result of a study by MacConnell and Company, a firm of registered engineers.
On December 8, 1978, the Tax Commissioner, appellee herein, issued Final Assessment Certificates of Valuation to appellant adjusting the value of appellant's Mentor property to conform with the value based on the useful lives and depreciation rates contained in appellee's "302 Computation" directive. This adjustment increased appellant's tax liability.
On appeal to the Board of Tax Appeals, the commissioner's determination that the MacConnell study appraisals do not reflect "true value" was affirmed.
The cause is now before this court on an appeal as of right.
Messrs. Thompson, Hine Flory, Mr. S. Stuart Eilers and Mr. Stephen H. Buescher, for appellant.
Mr. William J. Brown, attorney general, and Mr. Charles M. Steines, for appellee.
R.C. 5711.18 provides, in relevant part:
"* * * In the case of personal property used in business, the book value thereof less book depreciation at such time shall be listed, and such depreciated book value shall be taken as the true value of such property, unless the assessor finds that such depreciated book value is greater or less than the then true value of such property in money."
Appellant contends that the use of the "302 Computation" directive does not reflect the true value of its personal property pursuant to R.C. 5711.18. Once a taxpayer makes that allegation, it is incumbent upon the Board of Tax Appeals to apply a two-prong test to determine if the "302 Computation" is correct in a given case.
First, the board must determine if there exist special and unusual circumstances which require that the "302 Computation" not be used. If the board determines that such circumstances do exist, the "302 Computation" is inappropriate. If such circumstances do not exist the board must, second, determine if the rigid application of the "302 Computation" directive creates an unjust or unreasonable result in that case. If so, the directive is inappropriate. Alcoa v. Kosydar (1978), 54 Ohio St.2d 477; PPG Industries v. Kosydar (1981), 65 Ohio St.2d 80.
The board did not consider the second prong of the test. Therefore, the cause is remanded to the board for further proceedings in accordance with this opinion.
Cause remanded.
CELEBREZZE, C.J., W. BROWN, P. BROWN, SWEENEY, LOCHER, HOLMES and C. BROWN, JJ., concur.