1 BEFORE THE CALIFORNIA STATE BOARD OF EQUALIZATION 2 450 N STREET 3 SACRAMENTO, CALIFORNIA 4 5 6 7 8 REPORTER'S TRANSCRIPT 9 DECEMBER 16, 2015 10 11 12 13 14 ITEM H 15 TAX PROGRAM NONAPPEARANCE MATTERS - ADJUDICATORY 16 ITEM H2 17 FRANCHISE AND INCOME TAX MATTERS 18 MEMBER MOTION TO RESCIND NOVEMBER 17, 2015 VOTE 19 1. ROBERT H. LOWE AND SHERYL BERKOFF, 571973 20 21 22 23 24 25 26 27 REPORTED BY: Kathleen Skidgel 28 CSR NO. 9039 1 1 P R E S E N T 2 3 For the Board Jerome E. Horton of Equalization: Chairman 4 Sen. George Runner (Ret.) 5 Vice Chairman 6 Fiona Ma, CPA Member 7 Diane L. Harkey 8 Member 9 Yvette Stowers Appearing for Betty T. 10 Yee, State Controller (per Government Code 11 Section 7.9) 12 Joann Richmond Chief 13 Board Proceedings Division 14 For Staff: Lou Ambrose 15 Tax Counsel IV Legal Department 16 Grant Thompson 17 Tax Counsel IV Legal Department 18 Randy Ferris 19 Chief Counsel Legal Department 20 21 ---oOo--- 22 23 24 25 26 27 28 2 1 450 N STREET 2 SACRAMENTO, CALIFORNIA 3 DECEMBER 16, 2015 4 ---oOo--- 5 MR. HORTON: Ms. Richmond. 6 MS. RICHMOND: Our next matter's Item H, 7 Tax Program Nonappearance Matters - Adjudicatory. 8 Item H2 Franchise and Income Tax Matters. There's 9 only one sub-item. 10 MR. HORTON: Mr. Ambrose will introduce the 11 case to get it on the record. 12 MR. AMBROSE: Good afternoon. Lou Ambrose 13 for the Appeals Division. 14 Before the Board today is a motion to 15 rescind the prior vote in the Appeal of Robert Lowe 16 and Sheryl Berkoff. As a result, the Board's 17 discussion should be limited to considering whether 18 the prior vote should be rescinded and should not 19 include a new vote on the merits of the appeal or a 20 full discussion of the merits of any adjustment or 21 issue. 22 At this time the additional materials 23 submitted to the Board yesterday by the Franchise 24 Tax Board do not constitute part of the evidentiary 25 record on appeal and may be considered only for the 26 purpose of evaluating whether the materials support 27 reopening the matter for further consideration. 28 In the event the motion to rescind passes, 3 1 the Legal Department recommends that the Board 2 consider a motion to continue the hearing so that 3 the evidentiary record can be reopened 4 and provide -- and request that the Board provide 5 staff with any direction on any areas for which 6 additional briefing or evidence is desired. At that 7 time the information submitted yesterday could 8 become part of the appeal record and any additional 9 evidence or information could be requested, 10 distributed and made part of the evidentiary record 11 on appeal. 12 MR. HORTON: Thank you. 13 Member Ma. 14 MS. MA: Thank you, Members. 15 This matter was heard on November 17th, 16 2015 and it was my intention, and I believe the 17 intention of the majority of the Board, to disallow 18 the $1,358,792 in capitalized mortgage interest from 19 the Lowes' reported basis of 13,526,000, but 20 otherwise accept the return as filed. 21 Therefore, the adjusted basis should be 22 $12,167,208. However, the minutes reflected that 23 the Board adopted an adjusted basis in the property 24 of $11,368,562, which is not what I intended and 25 what I understood the motion was that we were voting 26 on. 27 Therefore, I move to rescind the motion and 28 reschedule the revote for a subsequent meeting. I 4 1 request the revote to be scheduled -- rescheduled 2 for the February Culver City meeting since the 3 taxpayers are located in southern California; 4 therefore, if they wish to comment at the hearing, 5 as is their right, it would be more convenient if 6 the matter was scheduled in Culver City. 7 MR. RUNNER: Second. 8 MR. HORTON: Motion by Member Ma as 9 articulated. Second by Member Runner. 10 Discussion? 11 Member Runner. 12 MR. RUNNER: Yeah, just -- just, again, to 13 review how this will kind of come back to us. 14 MR. AMBROSE: Mm-hmm. 15 MR. RUNNER: This will come back to us on 16 an H calendar? 17 MR. AMBROSE: Well, um -- 18 MR. RUNNER: I say -- here's my question. 19 MR. AMBROSE: Right. 20 MR. RUNNER: I ask that because -- 21 MR. AMBROSE: Uh-huh. 22 MR. RUNNER: -- one of the things that 23 Member Ma mentioned was that the point is that there 24 could be up for discussion or -- I'm not sure you 25 said "discussion," but that the taxpayer will be 26 able to address the issue. But I'm concerned that 27 that's in a very limited way if it comes up on an H 28 calendar. 5 1 MR. AMBROSE: Well, if it is on the H 2 calendar, of course it's nonappearance. The 3 taxpayer would have an opportunity to make public 4 comment. 5 MR. RUNNER: Right. 6 MR. AMBROSE: But that isn't technically 7 part of the -- 8 MR. RUNNER: So how would this -- so how 9 would this come back -- how could this come back to 10 us so that we could have a -- a fuller discussion, I 11 guess would be -- 12 MR. THOMPSON: You might consider 13 continuing the hearing. And then if -- 14 MR. RUNNER: But didn't we close the 15 hearing? 16 MR. THOMPSON: Well, that vote was 17 rescinded, right? If the vote passes to rescind, 18 then the hearing -- 19 MS. MA: Then we can vote to continue. 20 MR. THOMPSON: Yeah. 21 MR. RUNNER: Oh. When we took it under 22 submission, that's not closing the hearing. 23 MR. THOMPSON: Well, you'll be rescinding 24 the vote. So you could continue the hearing if, 25 uh -- if the vote to rescind passes. 26 MR. RUNNER: So -- well, let me ask. Okay, 27 hold on. Let me just see if I got this clear. 28 MR. AMBROSE: Mm-hmm. 6 1 MR. RUNNER: Normally when we take 2 something up for -- for -- at the end of the 3 meeting, the assumption is that we have closed the 4 public hearing. 5 MR. THOMPSON: Mm-hmm. 6 MR. RUNNER: And then we vote. 7 MR. THOMPSON: Mm-hmm. 8 MR. RUNNER: The only thing that we are 9 rescinding is the vote that was done at the end of 10 the meeting. 11 MR. THOMPSON: Mm-hmm. 12 MR. RUNNER: So I'm a little -- I just want 13 to make sure we have that correct, because I -- 14 because I always thought that once we -- once we 15 closed the public hearing discussion and we moved it 16 to a vote, that the public hearing was then 17 closed. 18 MR. THOMPSON: No, I believe you could have 19 continued the hearing during the vote. 20 MR. RUNNER: We could? 21 MR. THOMPSON: Yeah. 22 MR. RUNNER: Okay. 23 MR. AMBROSE: Mm-hmm. And -- 24 MR. RUNNER: Okay, that's good. I get 25 that. 26 MR. AMBROSE: There are 30/30/30 motions as 27 well that -- where -- 28 MR. RUNNER: That we continue the hearing 7 1 at that time. Okay. 2 MR. AMBROSE: Correct. 3 MR. RUNNER: Good, good. Okay, I 4 understand that. 5 Then I think the assumption would be that 6 this would come back on a -- back to us then on a -- 7 on a B calendar, correct? 8 MR. THOMPSON: If that's how the Board 9 would rule, yes. 10 MR. RUNNER: Is that the -- I'm just 11 concerned about how it is that it comes back to us 12 so that there's a -- we're able to talk about it and 13 the taxpayer's able to talk about it, if that -- but 14 I'm willing to respond back to Member Ma, what her 15 intention is. 16 MR. HORTON: Uh -- 17 MS. HARKEY: Here comes Chief Counsel. 18 MR. HORTON: Mr. Ferris. 19 MS. STOWERS: Yes. 20 MR. FERRIS: Yeah. To -- to the extent any 21 Member believes that there may be additional 22 information or argument that may be helpful to the 23 Board in its deliberations with respect to future 24 motions that the Board might make, we are 25 recommending that the Board vote to continue the 26 hearing so that the Board can receive this 27 additional evidence and argument and be able to 28 discuss it fully and be able to ask any questions of 8 1 either -- of both parties that would be relevant to 2 their deliberations. 3 MR. RUNNER: So is there a motion then to 4 rescind and then continue? 5 MR. FERRIS: First you have to rescind. 6 MR. RUNNER: And then we can do a 7 subsequent motion to continue the hearing? 8 MR. FERRIS: A second motion would be to 9 continue the hearing -- 10 MR. RUNNER: And then if -- 11 MR. FERRIS: -- if anybody believes -- 12 MR. RUNNER: Okay. 13 MR. FERRIS: -- that additional evidence 14 and/or argument may be helpful to the Board with 15 respect to any future motion. 16 MR. HORTON: Mr. Runner? 17 MR. RUNNER: I mean -- right. Again, I 18 just want to make sure that -- that -- that all of a 19 sudden, as this comes up, that this comes up in a 20 calendar to which it could be -- there could be some 21 discussion about it, if that's indeed what is 22 warranted with this additional information. 23 MR. FERRIS: Right. 24 MR. RUNNER: If we continue the hearing, 25 basically it could come up if -- if the taxpayer's 26 satisfied, it could come up on an H calendar, it 27 could come up then on a -- on a B calendar, right? 28 MR. HORTON: Mr. Ferris. 9 1 MR. FERRIS: Well -- 2 MR. HORTON: Hesitate to answer. 3 MR. FERRIS: I mean I think that if you 4 continue the hearing -- 5 MR. RUNNER: Yes. 6 MR. FERRIS: -- it will come back on a B 7 calendar. 8 MR. RUNNER: Okay. Unless the taxpayer 9 comes to an agreement. 10 MR. FERRIS: In which case it would come 11 back on a G calendar -- 12 MR. RUNNER: Oh, a G calendar, okay. 13 MR. FERRIS: Right -- or no, it would be 14 adjudicatory. 15 MR. HORTON: Adjudicatory. 16 MR. FERRIS: So it would be -- it would be 17 H. 18 MR. RUNNER: Yeah. 19 MR. THOMPSON: Well, if they came to 20 agreement, it might even not come back. But I don't 21 know if that's going to happen. 22 MR. RUNNER: Gotcha. That's probably -- 23 that's probably a pretty good guess. 24 Okay. I'm done. I get it. 25 MR. HORTON: Member Harkey. 26 MS. HARKEY: How -- and this is for Legal. 27 How is this different than if the taxpayer filed for 28 a rehearing, or, you know, another hearing? What's 10 1 that -- not a continuance, but actually filed an 2 appeal to have a rehearing. 3 MR. FERRIS: Right. If they filed a 4 petition. And they have until -- if the motion to 5 rescind does not carry, the taxpayer has until close 6 of business tomorrow to file a timely petition for 7 rehearing. 8 MS. HARKEY: Okay, so -- 9 MR. HORTON: They've previously been 10 advised of that. 11 MR. FERRIS: Right. And I'm saying it 12 publicly right now, too, just to reinforce that. 13 MR. HORTON: Yeah. 14 MS. HARKEY: Okay. I -- I get nervous when 15 things are just left dangling. These are -- this is 16 a lot of dollars for them. What -- what could go 17 wrong? Because -- 18 MS. MA: It doesn't get scheduled. 19 MS. HARKEY: It's not that it didn't get 20 scheduled, but if it came up and there was -- both 21 parties would be able to resubmit evidence, correct? 22 MR. FERRIS: Correct. Right. And if -- if 23 a motion to rescind passes and if a motion to 24 continue passes, we're also asking you to provide 25 Appeals guidance with respect to any additional 26 evidence, information, argument that you feel would 27 be helpful to you. And we would want to be 28 communicating that to the parties. 11 1 And since it would appear that it would be 2 in February, there would be sufficient time for them 3 to address that and hopefully the Board would have 4 the complete record that it needs to consider any 5 subsequent motions that might be different from the 6 original motion that would have been rescinded. 7 MR. RUNNER: Can I -- just to ask to Member 8 Ma, if the -- is the extent of your concern to 9 correct the -- get a corrected motion to what you 10 believe the original intent of the motion was to be? 11 MS. MA: Yes. 12 MR. RUNNER: Not necessarily have a new 13 hearing. 14 MS. MA: Correct. 15 MR. RUNNER: Okay. So if that be the case, 16 what would be the proper way to just get to that 17 point? 18 MR. HORTON: Bring it back on an H 19 calendar. 20 MR. FERRIS: Right. You would just rescind 21 and bring it back on the H calendar. 22 Only out of an abundance of caution are we 23 bringing up this point that if there 24 is additional -- if you feel the record is complete 25 enough to make whatever subsequent motions might be 26 contemplated, then you don't need to continue the 27 hearing. 28 MR. RUNNER: Okay. 12 1 MR. FERRIS: But if there's any doubt that 2 the record, as it stands right now, is not 3 sufficient to support whatever motions may be made, 4 then we would advise that you reopen the hearing so 5 that we don't come back in February and then have to 6 continue it again because the record is closed and 7 some additional information is relevant and can't be 8 put into the record -- 9 MS. HARKEY: Well -- 10 MR. FERRIS: -- to support a motion. 11 MR. HORTON: Member Harkey. 12 MS. HARKEY: Let me ask you this: If we 13 just wanted to have no additional information and 14 just rescind and then have a revote, could we do so? 15 MR. FERRIS: Oh, yes. 16 MS. HARKEY: And we wouldn't have to hear 17 or see because -- I was the maker of the motion. 18 MR. FERRIS: Correct. 19 MS. HARKEY: And I did contemplate a little 20 bit different, although I had all the data and I had 21 all the spreadsheets. I had -- when we got into all 22 the conversation, I was making a motion initially 23 for the entire. But, you know, then we got a lot of 24 information. 25 MR. FERRIS: Yeah. So we could -- 26 MS. HARKEY: So it's -- 27 MR. FERRIS: We could do that -- 28 MS. HARKEY: It's -- 13 1 MR. FERRIS: -- on an H calendar and they 2 could make public comment in February. 3 MS. HARKEY: But we can't -- 4 MR. FERRIS: But the Board couldn't take 5 whatever they say in public comment into account 6 with respect to that vote. 7 MS. HARKEY: Right. Right. But what I'm 8 saying -- what I'm saying is that my -- you know, I 9 mean I did make the initial motion. I made a 10 secondary motion. So if we were to rehear this, we 11 wouldn't have to be taking additional information. 12 We could just rehear or we could just revote. 13 MS. MA: Vote. 14 MR. FERRIS: If they don't file a petition 15 for rehearing -- which would be a whole different 16 process. 17 MS. HARKEY: Right. 18 MR. FERRIS: Then if you don't continue the 19 hearing, the record of the hearing is closed because 20 you took it under submission and didn't give any 21 other indication that you wanted to continue the 22 hearing, so whatever is said in February, if that's 23 when it comes back, will not be relevant or 24 probative to anything you decide in February. 25 MS. HARKEY: Okay. 26 MR. FERRIS: Because you will -- you will 27 do it based on the record as it stood in November. 28 MS. HARKEY: I just get really nervous of 14 1 how it could go wrong. And so I'm -- I'm just being 2 a little extra cautious to be sure I understand it 3 fully what the options are here. 4 MR. RUNNER: Right. 5 MR. HORTON: Member Runner. 6 MR. RUNNER: I think it's wise for us to 7 have a good discussion, yeah. 8 MR. HORTON: Member Runner. 9 MR. RUNNER: Yeah. And so just to clarify, 10 if we move forward with the issue of rescinding, and 11 it -- would it then at that point simply 12 automatically come back to the H calendar? 13 MR. FERRIS: Correct. 14 MR. RUNNER: Okay. 15 MS. HARKEY: But we'd have to have 16 instruction, right? 17 MR. HORTON: Well -- 18 MR. RUNNER: Well, no, let me just -- so it 19 would come back on an H calendar. And then at that 20 point a new motion can be made at that time that 21 would maybe reflect at least the nature of the 22 motion, I don't know if it will be like that, but 23 like -- like Member Ma did. 24 At that point then, that could conclude 25 that particular hearing. And then if the taxpayer 26 feels like they have additional information or 27 issues that they want to talk about in regards to 28 some of these other issues, then they can just 15 1 simply go through the process of filing for a new 2 hearing after that, correct? 3 MR. FERRIS: That is correct. 4 MR. RUNNER: Okay. 5 MR. HORTON: Just to clarify, if I could. 6 Maybe you ought -- maybe we ought to give the 7 Members all of our options. 8 The rescinding of the motion basically 9 puts -- opens the case up as if though it never 10 happened and brings the case before us today. 11 Today, literally, we could actually, other 12 than having to post some time, then the Members at 13 posting the time can take the matter up. 14 If we take it up -- if we direct staff to 15 say we want it brought back on the H calendar 16 because we don't feel that any additional 17 information is necessary, we've heard everything, 18 all of the facts are on the table and we can make a 19 decision based on the facts presented to us 20 previously, if we feel that there is additional 21 evidence that need to be considered, we would ask 22 that it comes back on a B calendar so that the 23 parties can write their briefs, provide data to the 24 Members as if though it had started all over again. 25 And, in that case, they don't have to submit any 26 additional evidence to prove to the Department that 27 there's basis for a rehearing even though the Board 28 has the ultimate decision on the rehearing. 16 1 And the matter before us is to rescind and 2 open it back up or not. 3 Mrs. Stowers. 4 MS. STOWERS: Yes. Thank you. 5 Ms. Ma, I want to make sure I understand 6 that you're -- you're asking to rescind because you 7 were under the impression that the motion was going 8 to include the 1.3 million in interest. 9 MS. MA: Yes. And I was -- 10 MS. HARKEY: Exclude -- 11 MS. MA: I want to exclude it -- 12 MS. STOWERS: Exclude. 13 MS. MA: -- meaning decrease -- 14 MS. STOWERS: Yeah. 15 MS. MA: -- the reported basis on their tax 16 return by the 1.3 -- 1,358,729 -- 792. 17 MS. STOWERS: Okay. So you did not think 18 the motion included the construction costs as agreed 19 by Mr. Szabo? Because when -- I know that we had 20 one motion which was withdrawn. And then Ms. Harkey 21 made the second motion to include the 8.4 million in 22 construction costs and other various items. 23 So I'm not sure -- did you -- 24 MS. MA: No. 25 MS. STOWERS: You didn't think we were 26 voting on -- 27 MS. MA: No. I thought we were just -- we 28 were just decreasing the basis by the -- 17 1 MS. STOWERS: -- by the 1.3. 2 MS. MA: -- capitalized mortgage interest 3 of 1.3. 4 MS. STOWERS: Okay. I understand what your 5 concern is. 6 My concern is that the fact that since we 7 had such a great discussion about the 8.4 where Ms. 8 Harkey even provided the detail and the schedule and 9 I took some time to look at it, from my perspective 10 I was clear on what I was voting for and concluded 11 that Ms. Harkey had made a reasonable estimate of 12 the cost of the property. 13 I'm also concerned that a Notice of 14 Determination was sent to the parties, and that 15 notice was sent on November 19th, 2015 informing the 16 parties of the Board's decision. And I just have a 17 concern to rescind something after we sent them 18 formal notification. 19 I see this being different than in the past 20 when the Board has voted on a case on a two-day or 21 three-day meeting and came back and expunged a vote 22 or rescinded a vote. In those type of situations 23 the parties to the appeal had not been contacted 24 officially. 25 And since they have been contacted 26 officially on this one, I cannot join in rescinding 27 the motion. I think the best cause of action here 28 is for the parties to file a petition for rehearing 18 1 and to consider it at the rehearing. And even at 2 that point, if they want to make the argument that 3 additional information should be allowed, they can 4 provide the evidence or the arguments and we can 5 evaluate it and determine if we want to include the 6 additional basis without granting a rehearing. We 7 can just make the -- we can agree with them then. 8 But I think we should respect the process, 9 especially considering that we sent all the official 10 notification. 11 MS. MA: So, can I -- 12 MR. HORTON: Yeah, sure. 13 MS. MA: -- Mr. Chair. 14 MR. HORTON: Yeah. 15 MS. MA: You know, we understand that there 16 was some notice or not a notice. And if there was a 17 notice, was it sent out before the minutes were 18 clarified for the case? 19 So can Legal please clarify whether a 20 Notice of Determination was sent to the taxpayers? 21 MR. THOMPSON: Yes. After every oral 22 hearing we send a notice to the parties about how 23 the Board voted. And so they received a pretty 24 simple notice; I don't have it in front of me, but 25 it's a couple sentences describing the Board's vote. 26 And it advises -- 27 MR. FERRIS: That was within a day or two, 28 right? 19 1 MR. THOMPSON: Within a day or two because 2 we want to let the parties know that the clock is 3 ticking to file a petition for rehearing. And the 4 notice would state that the matters will become 5 final in 30 days if a petition for rehearing is not 6 filed. 7 MS. MA: So is that the typical process? 8 MR. FERRIS: Yes. 9 MR. RUNNER: The reason -- 10 MR. HORTON: Member Ma? 11 MS. MA: Okay. 12 MR. HORTON: Member Runner? 13 MR. RUNNER: The reason why I think the 14 rescinding is a -- is a good option is because there 15 was a lot of confusion of the motion itself. 16 I would agree if -- I would agree that it 17 would be a better way for a rehearing if there was 18 clarity in the motion and everybody understood 19 exactly what it was. 20 I, for one, in that discussion, because I 21 was trying to get to the numbers because we kind of 22 started doing one calculation over here and then 23 there was a new calculation going on. And I know I 24 specifically asked during that, is that number the 25 same as -- would their liability be the same as if 26 we went ahead and just took away the mortgage issue? 27 And the answer at that point was yes. 28 And so I believe at that point that's what 20 1 kind of took us down the path to not understanding 2 exactly the outcome of the motion, which is why I 3 think this is not necessarily a rehearing issue. 4 It's not that the taxpayer has new information or 5 anything, it's that we had some confusion and is why 6 I think it's appropriate to rescind. 7 MS. HARKEY: There were a lot of numbers 8 flying around. 9 MR. HORTON: Yeah. 10 MS. STOWERS: May I comment? 11 MR. HORTON: Ms. Stowers. 12 MS. STOWERS: I respect that. But I'm just 13 looking at the Notice of Determination. 14 Based on the evidence presented on appeal, 15 this Board determined an adjusted basis for the 16 property of 11,368,562 computed as follows: 17 Property acquisition price 2.8 million; 18 estimated construction cost 8.4; landscaping costs, 19 62,000; related expenses and fees 17,000. 20 So at least the author, the writer of this 21 letter was clear on what the motion entailed. 22 I -- I stand by my objection. I think we 23 need to respect the process when an official 24 determination has been sent to the parties. 25 MR. HORTON: Okay. 26 Members, I think it's inherent upon the 27 Members as triers of fact to do whatever they need 28 in order to make sure that they have all the facts 21 1 on the table in making their decision. It's -- and 2 conceivably just part of our fiduciary 3 responsibility to the State of California and to 4 ourselves. 5 What I'm hearing the Members say is that 6 all the information was on the table, and so there 7 isn't a necessity to bring this back on a B 8 calendar. If we were to bring it back, maybe an H 9 calendar to change the motion. 10 So my thoughts relative to -- to -- to the 11 motion, after reviewing the tape and viewing the 12 motion and the discussion, is that the motion was 13 clear. 14 I, quite frankly, you know, from my 15 perspective under the Cohan Rule, all of the motions 16 were a little bit friendly to the taxpayer. But 17 that being -- that being what it is. 18 But the motion was clear. The interest 19 adjustment was reflected in the motion and 20 appropriately reflected in the motion. 21 My view of the motion initially was, is 22 that some of the items included in the motion should 23 not have been included in the motion by virtue that 24 there wasn't documentation to -- to -- to support 25 it. 26 And so, I don't necessarily -- I think 27 probably the best way to deal with this from my 28 perspective is to have the parties -- have the 22 1 taxpayer request a rehearing and then just have it 2 come back if that's the case, if everybody wants to 3 hear it and everybody believes that we need to 4 discuss this further, which accomplishes the same 5 objective at the end of the day. 6 But, that be it, there's a motion on the 7 floor with a second. 8 Objection noted. 9 Ms. Richmond -- 10 My apologies. Member Ma. 11 MS. MA: I had one more question. 12 So after the hearing, when do the draft 13 minutes go out? 14 MS. RICHMOND: They're on the agenda for 15 today for the Board's adoption. 16 MS. STOWERS: The preliminary -- the PROBA. 17 MS. RICHMOND: Oh, that's already been 18 posted to the website. 19 MR. FERRIS: How many days does it take to 20 put it in? 21 MS. RICHMOND: About three. 22 MR. HORTON: Three days. 23 MS. RICHMOND: Two to three days. 24 MS. MA: So in this case the letter went 25 out the next day, before the minutes were posted? 26 MR. THOMPSON: I don't recall. 27 MR. AMBROSE: I -- I would say so, yeah. I 28 don't specifically recall, but I'd -- I'd feel 95 23 1 percent sure that that's how it happened, yeah. 2 MR. FERRIS: We try to notify as soon as 3 possible because with franchise and income tax 4 matters it's a strict 30-day window for them to 5 petition for rehearing. There's more time in 6 business taxes; it's usually 45 to 60 days before 7 something becomes final. So with franchise and 8 income tax, we try to get those letters out. 9 MR. THOMPSON: Yeah. And we actually work 10 with Board Proceedings to have all the minutes, so 11 to make sure the minutes are correct as we 12 understood them. And I know sometimes a discussion 13 evolves. And here it appears there was a 14 misunderstanding. But that's -- that's our standard 15 procedure is, uh -- 16 MS. MA: So shouldn't the letter go out 17 after the minutes are approved? 18 MS. HARKEY: Probably not. 19 MS. STOWERS: What does the Rule of Tax 20 Appeals say? 21 MR. THOMPSON: Actually, that's a good 22 point. The Rule of Tax Appeals gives, I believe, 23 three business days for the letter to go out. I 24 could look at it. 25 So it's a pretty strict time and 26 deadline. 27 MR. HORTON: To the -- to the -- Member Ma, 28 with your permission. 24 1 Sending this letter does not prohibit the 2 Board, if the Board is of a mind that there is 3 factual evidence or some consideration that should 4 be taking place, it is not a condition upon which we 5 can make a decision. 6 We can, of course. We can say anything we 7 want to say up here unfortunately. But the -- as 8 far as the appeals rules and so forth, that's not 9 one of the issues. 10 Now, if there was a technical error of some 11 sort where the motion wasn't clear or the intent to 12 take something up that we didn't take up that was 13 kind of codified or included in something, that's 14 the technicality. 15 This is a point where the motion was clear, 16 the interpretation, if I'm -- I don't want to read 17 into it. But the understanding of the motion wasn't 18 necessarily clear, and therefore a need for further 19 clarification or modification to the motion is what 20 I'm hearing is the position of Member Ma. 21 So there's a motion on the table, a second. 22 Ms. Richmond, please call -- 23 And -- and let me just say for the record, 24 when it comes to -- to those technical reasons, I 25 generally say, generally good with it. I think, 26 it's appropriate. 27 Ms. Richmond, please call the roll. 28 MS. MA: The motion's to rescind. 25 1 MR. HORTON: The mo- -- 2 MS. HARKEY: To rescind. 3 MR. HORTON: There's a potential for two 4 motions. We will take them up separately, Members. 5 First motion before us is a motion to 6 rescind. Second by Member Runner. 7 Objection noted. 8 Ms. Richmond, please call the roll. 9 MS. RICHMOND: Mr. Horton. 10 MR. HORTON: No. 11 MS. RICHMOND: Ms. Harkey. 12 MS. HARKEY: Aye. 13 MS. RICHMOND: Mr. Runner. 14 MR. RUNNER: Aye. 15 MS. RICHMOND: Ms. Ma. 16 MS. MA: Aye. 17 MS. RICHMOND: Ms. Stowers. 18 MS. STOWERS: No. 19 MS. RICHMOND: Motion carries. 20 MR. HORTON: Now, Members, the motion 21 before us -- the option before us is to bring it 22 back on the B calendar, have the facts -- additional 23 facts brought forward. The other facts can be 24 rediscussed. 25 In fact, bringing it back on the B calendar 26 basically allows us to do the case all over again if 27 we want. We can bring all of the facts back, which 28 would probably be the case, I would imagine, that 26 1 the parties would want to sort of adjudicate this 2 all over again to make sure that their points were 3 clear. That's a B. 4 On an H calendar, it comes back on the H 5 calendar, the parties have an option to come and say 6 whatever they want to say. The Board can't take 7 that under consideration in our vote, and we just 8 vote based on the previous record under the H 9 calendar. 10 Is there a motion? 11 MR. RUNNER: I'm satisfied with just the 12 revote and then that enables then, if the taxpayer 13 wants to go appeal -- wants to file for rehearing at 14 that point, they can, so -- 15 MR. HORTON: Member Runner moves to bring 16 the matter back on the H calendar, in the month of 17 February. Second by Member Ma. 18 Objection noted. 19 Ms. Richmond, please call the roll. 20 MS. RICHMOND: Mr. Horton. 21 MR. HORTON: No. 22 MS. RICHMOND: Ms. Harkey. 23 MS. HARKEY: Aye. 24 MS. RICHMOND: Mr. Runner. 25 MR. RUNNER: Aye. 26 MS. RICHMOND: Ms. Ma. 27 MS. MA: Aye. 28 MS. RICHMOND: Ms. Stowers. 27 1 MS. STOWERS: No. 2 MS. RICHMOND: Motion carries. 3 MR. HORTON: Thank you. We survived. 4 ---oOo--- 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 28 1 REPORTER'S CERTIFICATE 2 3 State of California ) 4 ) ss 5 County of Sacramento ) 6 7 I, KATHLEEN SKIDGEL, Hearing Reporter for 8 the California State Board of Equalization certify 9 that on December 16, 2015 I recorded verbatim, in 10 shorthand, to the best of my ability, the 11 proceedings in the above-entitled hearing; that I 12 transcribed the shorthand writing into typewriting; 13 and that the preceding pages 1 through 28 constitute 14 a complete and accurate transcription of the 15 shorthand writing. 16 17 Dated: December 31, 2015 18 19 20 ____________________________ 21 KATHLEEN SKIDGEL, CSR #9039 22 Hearing Reporter 23 24 25 26 27 28 29