1 BEFORE THE CALIFORNIA STATE BOARD OF EQUALIZATION 2 450 N STREET 3 SACRAMENTO, CALIFORNIA 4 5 6 7 8 REPORTER'S TRANSCRIPT 9 JANUARY 26, 2016 10 11 12 13 14 15 FINAL ACTIONS 16 17 18 19 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 5 Sen. George Runner (Ret.) Vice Chair 6 7 Fiona Ma, CPA Member 8 9 Diane L. Harkey Member 10 11 Yvette Stowers Appearing for Betty T. 12 Yee, State Controller (per Government Code 13 Section 7.9) 14 Joann Richmond 15 Chief Board Proceedings 16 Division 17 For Board of 18 Equalization Staff: Jeff Angeja Tax Counsel IV 19 Legal Department 20 21 ---oOo--- 22 23 24 25 26 27 28 2 1 450 N STREET 2 SACRAMENTO, CALIFORNIA 3 JANUARY 26, 2016 4 ---oOo--- 5 MR. HORTON: Ms. Richmond. 6 MS. RICHMOND: Next are those matters that 7 were taken under submission. 8 Our first matter is B1 Zongrong Liu and 9 Ying Ma. This was a waived appearance. 10 ---oOo--- 11 ITEM B1 12 ZONGRONG LIU and YING MA 13 NO. 796330 14 ---oOo--- 15 MS. HARKEY: I'll move to deny the appeal 16 and sustain the FTB. 17 MR. HORTON: Member Harkey moves to sustain 18 the FTB. Second by Member Stowers. 19 Without objection, Members, such will be 20 the order. 21 ---oOo--- 22 23 24 25 26 27 28 3 1 MR. HORTON: Ms. Richmond. 2 MS. RICHMOND: Our next matter is B2 3 Michael J. Barkley and Laura Ann Barkley. 4 ---oOo--- 5 ITEM B2 6 MICHAEL J. BARKLEY and LAURA ANN BARKLEY 7 NO. 852234 8 ---oOo--- 9 MS. HARKEY: I'm going to move to grant 10 this appeal under my belief that we had a protective 11 claim on the tax return. 12 MR. HORTON: Member Harkey moves to grant 13 the appeal. 14 Dies without a second. 15 Subsequent motion? 16 MS. STOWERS: Move to sustain the Franchise 17 Tax Board. 18 MR. HORTON: Member Stowers moves to 19 sustain the Franchise Tax Board. Second by Member 20 Ma. 21 Without objection, Members, such will be 22 the order. 23 ---oOo--- 24 25 26 27 28 4 1 MR. HORTON: Ms. Richmond. 2 MS. RICHMOND: Our next matter is B3 Robert 3 W. Holman and Margaret E. Holman. 4 ---oOo--- 5 ITEM B3 6 ROBERT W. HOLMAN and MARGARET E. HOLMAN 7 NO. 856805 8 ---oOo--- 9 MS. HARKEY: I'm going to move to grant the 10 appeal. 11 MR. HORTON: Member Harkey moves to grant 12 the appeal. 13 MR. RUNNER: I second. 14 MR. HORTON: Second by Member Runner. 15 MS. STOWERS: I want to have a 16 discussion. 17 MR. HORTON: Discussion, Members. 18 MS. STOWERS: This was a very complicated 19 case. 20 I know there was some concerns that the 21 Franchise Tax Board was communicating directly with 22 the individuals and not at the trust level. 23 MS. HARKEY: I think the timing issues 24 were -- were really key for me. 25 MS. STOWERS: Yeah. 26 MS. HARKEY: The timing issues as far as 27 going back after the trust. 28 Also, when the FTB determined that they 5 1 decided that the trust was no longer valid and it 2 became a grantor trust is very confusing to me as to 3 whether that -- where that was established and 4 within what time frame. And if in fact that was the 5 case -- and that seemed to be their big case -- why 6 didn't they notify the taxpayer? 7 MS. STOWERS: I think that's why I was 8 going to comment on that. I mean, first, trying 9 to -- a little insight. 10 When -- generally speaking, when FTB is 11 auditing a pass-through entity of some sort or a 12 higher entity and there's owners involved, they 13 would notify the individuals that that entity is 14 subject -- is under audit. And they mainly notify 15 them because the tax will most likely affect the 16 individuals, so they want to let them know that it's 17 coming. 18 The reverse generally does not happen 19 because if they're auditing the individuals based on 20 something that's on their tax return that came from 21 a trust or a S corporation, those individuals, or 22 either the owners of the S corporation, or in this 23 case the trustees or the fiduciaries of the trust, 24 so not only do they know what's going on, they're in 25 possession of all the documents to support what they 26 did with their trust instrument. 27 As a matter of fact, when the FTB started 28 to audit in September of '07, they basically started 6 1 asking questions about this charitable remaining 2 trust. So there is effective notification at that 3 trust level that something's not right. 4 With that being said, this whole notice 5 requirements and letting someone know it's for the 6 taxpayer who's going to end up paying the tax, and 7 in this case it is the individuals. 8 So 19033 that says FTB must give notice is 9 referring to whoever they're going to give a 10 deficiency assessment to, not to some other entity. 11 And then the four-year statute of limitation and the 12 waiver that the individuals sign also applies at the 13 individual level. 14 So in my take on notice, they did do the 15 notice. We may want to raise an eyebrow, maybe they 16 should have done it a little clearer. But the -- 17 the -- at the end of the day, the taxpayers who were 18 going to have to pay this additional tax knew as 19 early as 2007, before the statute of limitations ran 20 on any taxpayer or entity that there was a concern 21 with this trust. 22 MS. HARKEY: Yeah, I -- I agree with you. 23 I understand that you may have known you were being 24 audited, but you never understood at any point in 25 time that you -- your trust was being negated and 26 all of a sudden you were a grantor trust. 27 When I read this, and I went through this 28 whole thing before I came to the hearing, I was 7 1 definitely in the FTB's favor. After I went through 2 the hearing and I heard and I understood that they 3 had already contrib- -- donated or -- or made a gift 4 of -- to a -- to a charity, they treated this as a 5 charitable trust all the way down the line. 6 So I don't believe the taxpayers ever knew 7 they did not have a charitable trust. Because 8 they -- they got rid of $2.2 million, which is in 9 essence what the FTB now wants tax on and they don't 10 have the property. 11 I was -- you know, I didn't get that until 12 I sat at this hearing. So I do believe that they 13 treated it as a charitable remainder trust the whole 14 entire time; and that had they had an inkling, they 15 may have, you know, tried to -- but I'm not so sure 16 that the FTB established that they had violated. 17 I think that, you know, there were some 18 actions, but I think to just negate the whole trust 19 and tax the amount that was already donated or -- or 20 gifted to a charity is a little bit -- I have a 21 problem with that. 22 MS. STOWERS: Okay. 23 MS. HARKEY: So I do think they treated it, 24 they -- they wanted it to be a charitable remainder 25 trust. They treated it as such. When they -- when 26 they eliminated it, they did the proper method 27 towards the charitable institution. They followed 28 the law as they understood they were operating. Had 8 1 they understood they were operating as a grantor 2 trust, I think they would have stepped up a lot 3 quicker. 4 MS. STOWERS: Okay. 5 MR. RUNNER: Yeah, I think that's my -- my 6 issue is I think they would have operated 7 differently if they knew that there was this -- 8 there was going to be this revocation of the 9 charitable trust and then therefore then viewed and 10 looked at then and, you know, taxed. Like looked at 11 as a grantor trust. 12 And I'm not sure -- I'm still unclear as to 13 whether or not the FTB had the -- had the -- really 14 had the ability to actually make that decision in 15 that regard. And I think there was quite a bit, at 16 least some confusion and discussion about whether or 17 not they could actually remove the charity, that 18 charitable trust at that point and assign it a 19 grantor trust. 20 So, that's where I'm at. 21 MS. STOWERS: Okay. I just object to the 22 motion then. 23 MR. HORTON: Member Ma. 24 MS. STOWERS: I just have one more comment. 25 MR. HORTON: Mm-hmm. 26 MS. STOWERS: Just when I look at the 27 entire transaction, that it was a personal resident 28 that they were living in, that they wanted to sell, 9 1 couldn't sell. They put it into a tax-deferred 2 entity so that the gain basically went untaxed until 3 subsequent distribution. 4 They benefited from a charitable 5 contribution, but yet they're still living in the 6 house. It just doesn't sit well. 7 They say they paid the trust rent, but 8 there was no evidence to support that they paid a 9 rent, but yet the trust takes deductions for 10 maintaining the house. 11 So, I respect the Members' opinion that FTB 12 did not maybe have the right to revoke the 13 treatment, but I think they did. I think it was a 14 solid audit and I object to the motion. 15 MS. HARKEY: I was there prior to the 16 hearing. 17 MR. RUNNER: Real quick on that is, one of 18 the facts that was interesting to me is that while 19 they were living at the house, they were actually 20 renting it from the trust, from the charitable 21 trust. 22 MS. STOWERS: But they showed no evidence. 23 They said they rented it, but they didn't show any 24 evidence of them paying rent to the trust. And the 25 trust did not report any income on the trust return 26 from that rental activity. But yet, the trust took 27 deductions as if it was rental property. 28 MS. MA: Go ahead. 10 1 MR. HORTON: Members, I mean I think this 2 is abuse of a tax exempt structure trust. 3 Clearly the evidence indicates that they 4 were able to take the $850,000 deduction when 5 they -- to a charitable organization when they 6 placed -- first placed the property in. Clearly the 7 evidence indicates that $1.2 million has gone 8 untaxed, never been taxed, and will never be taxed 9 if in fact we rule against the FTB in this case. 10 The law is clear. The unfortunate thing, 11 or the fortunate thing, or the legislative logic 12 behind putting so many restrictions on a trust, 13 saying that you can't just go in and take hundreds 14 of millions of dollars out of a trust and put it 15 into your personal bank account and still have the 16 benefits of all the deductions that go along with 17 that. The initial deductions and not paying tax on 18 the 1.2 million. 19 Then, relative to the intent of the 20 parties, clearly there's an act of self-dealing here 21 that they admit to. The record did reflect that the 22 trust paid the expenses while the individual's 23 living in the property. Although incumbent upon the 24 FTB, in which they've met that burden of the 25 appropriate notification, it's not incumbent upon 26 the FTB to give them advice and to have them do it 27 right. 28 By the testimony of their expert here, it 11 1 was just a mistake on the part of their CPA. And 2 had they been notified, given the knowledge that 3 they have now, they clearly say they would have went 4 back and cured it. But yet still, they never did go 5 back and cure it. And at the end of the day, you 6 have a situation where you've set up a trust for the 7 benefit of a nonprofit; that's why you get the 8 deductions. And the nonprofit, even though they 9 received a portion of the revenue, which is a large 10 amount, nowhere near what they would have received 11 had this been treated properly. 12 And so the benefactors of -- of this 13 mistake is the taxpayers, not the State of 14 California; they're not benefiting. It is not, to 15 the extent that they should be, in accordance with 16 the law. It is not the nonprofit; they're not 17 benefiting to the extent that they should be in 18 accordance with the law. 19 And those acts just -- it's just difficult 20 for me to award someone and have someone benefit 21 from their own mistakes. But respectful of the 22 thought process of my colleagues. 23 MS. MA: Okay. So, I've been going back 24 and forth on this. 25 First off, obviously it's not a clear-cut 26 case by them living in their home for six months. 27 You know, I know that they could cure it as part of, 28 you know, the trust. 12 1 I also hear what you're saying, Ms. 2 Stowers, that when you're going to audit 3 pass-through entities, usually the notices do go, 4 not only to the entity but also to the -- you know, 5 the beneficiaries, the partners, whoever's getting 6 the K-1, so that everybody knows that something is 7 happening. So I kind of hear that. 8 It also bothers me a little bit that they 9 terminated their trust earlier. Usually charitable 10 remainder trusts, you know, continue for a certain 11 period of time so that you can continue to get the 12 tax benefits. And, you know, it goes certain 13 deductions you get for charity purposes and then the 14 principal, you know, goes to where it's designated. 15 And the fact that this was terminated 16 early, they had excess distributions, the auditors 17 may not have caught it in time. But still, I think 18 the trust is still susceptible or open to an audit 19 to make sure that it was done correctly. Whether it 20 was terminated early or it was still in existence, I 21 still think that it would have been subject to an 22 audit. 23 So I am going to be moving with the 24 Franchise Tax Board on this case. 25 MR. HORTON: Further discussion, Members? 26 MS. HARKEY: There's a motion and a second. 27 Do you want to vote? Or do you want to -- what do 28 you want to do? 13 1 MR. HORTON: It's up to the maker of the 2 motion. 3 MS. HARKEY: Well, we can have a vote. I 4 mean, I know where it's going. 5 MR. HORTON: There's a first and a -- a 6 first and a second. 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: No. 17 MS. RICHMOND: Ms. Stowers. 18 MS. STOWERS: No. 19 MS. RICHMOND: Motion fails. 20 MS. STOWERS: Motion to sustain the 21 Franchise Tax Board. 22 MS. MA: Second. 23 MR. HORTON: Second by Member Ma -- motion 24 by Member Stowers, second by Member Ma. 25 Objection -- 26 MR. RUNNER: Yeah. 27 MR. HORTON: -- noted. 28 Ms. Richmond, please call the roll. 14 1 MS. RICHMOND: Mr. Horton. 2 MR. HORTON: Aye. 3 MS. RICHMOND: Ms. Harkey. 4 MS. HARKEY: I'm sorry. This was very 5 confusing. 6 I'll just -- I'm going to lay off, not 7 going to vote. No vote. 8 MS. RICHMOND: Mr. Runner. 9 MR. RUNNER: No. 10 MS. RICHMOND: Ms. Ma. 11 MS. MA: Aye. 12 MS. RICHMOND: Ms. Stowers. 13 MS. STOWERS: Yes. 14 MS. RICHMOND: Motion carries. 15 ---oOo--- 16 17 18 19 20 21 22 23 24 25 26 27 28 15 1 MR. HORTON: Ms. Richmond, next item. 2 MS. RICHMOND: Our next item is C1 New NGC, 3 Inc. 4 ---oOo--- 5 ITEM C1 6 NEW NGC, INC. 7 NO. 485164, 547426 (OH) 8 ---oOo--- 9 MR. RUNNER: Talk about confused. 10 MS. HARKEY: Yeah. This actually wasn't as 11 confusing. I had -- you know, I -- I did a total 12 flip on the other one from where I was when I walked 13 in. 14 I just -- I'm wondering if we should take 15 these one at a time because it seemed like we had 16 some -- 17 MR. RUNNER: One chemical at a time. 18 MS. HARKEY: One chemical at a time, to see 19 where we're going. 20 I originally was thinking of making a 21 motion to -- to grant the claim for refund with the 22 exception of Versenex. I did not feel that Versenex 23 was -- I thought that it was a chemical reaction, 24 and that's really what it was for. 25 MS. MA: I would second that. 26 MS. HARKEY: Okay. I have a second. 27 MS. STOWERS: What are we doing? 28 MR. HORTON: Members, there's a motion 16 1 to -- to grant the claim for refund on all items, 2 with the exception of Versenex. 3 Did I state your motion? 4 MS. HARKEY: You did. 5 MR. HORTON: Member -- by Member Harkey. 6 And second by Member Ma. 7 Discussion, Members? 8 MS. STOWERS: I'm not too sure about all of 9 the chemicals. But I do want to comment that if the 10 majority of the Board agrees to grant, that I think 11 the proper method is to go back for a re-audit and 12 look at this difference between use tax and sales 13 tax and determine if something needs to be, whatever 14 their term is, tax paid -- 15 MR. ANGEJA: Tax paid purchases resold 16 deduction. 17 MS. STOWERS: Thank you. 18 So I would say a re-audit and -- 19 MR. RUNNER: That's fine. 20 MS. STOWERS: I don't even know we've -- if 21 you guys -- whether you guys want them to have the 22 option to come back after the re-audit, but 23 definitely a re-audit. 24 MS. HARKEY: I -- I would add that to the 25 motion. I think that's probably appropriate. 26 MR. RUNNER: Appropriate. 27 MS. HARKEY: Because we really don't -- 28 don't know. 17 1 MS. STOWERS: With respect to the other 2 chemicals, I -- I -- I see this acid tartaric -- 3 Let me get to my notes. 4 MS. HARKEY: So now you're going to -- 5 MS. STOWERS: -- being -- having a 6 functional use after the manufacturing process. 7 The potassium sulfate, I thought the 8 claimant indicated that even after the manufacturing 9 process is completed, the sulfate continues to 10 inhibit mold and mildew growth. And that's very 11 chemical and technical to me. But I'm just trying 12 to visualize if you have something like this in your 13 wallboards, you don't get mold. And so I'm leaning 14 towards that that basically had a functional use 15 afterwards. 16 The other chemicals, I'm not there. But 17 there is a motion and a second. 18 MR. HORTON: Okay. 19 Members, again, I mean the law is very 20 clear to me. I wanted to have the discussion 21 because I wanted the taxpayer to have the benefit of 22 the doubt. And for -- and I'm really excited about 23 the -- I'm pleased that we had that discussion. 24 To me, these chemicals, if you were to 25 spray them on the wallboard after, as articulated I 26 think by several, after the fact they wouldn't 27 accomplish any objective whatsoever. And they 28 wouldn't make it more -- less resistant to water, 18 1 wouldn't make it harder. If you just took it and 2 sprayed it on the wallboard, it wouldn't do 3 anything. And its inherent properties is such that 4 it exists there within the body, with the -- and 5 even the acid tar- -- oh, man, I lost it. 6 MS. HARKEY: Tartaric. 7 MR. ANGEJA: Tartaric Acid. 8 MR. HORTON: Tartaric acid, tartaric acid, 9 I don't believe it had any -- any effect. But by 10 virtue that the Department couldn't dispute that, I 11 feel it's incumbent upon me to give the taxpayer the 12 benefit of the doubt and judge the evidence as 13 presented to us, not the evidence hoped to be 14 presented to us some ways down the road. 15 But, again, I respect there's a motion and 16 a second to -- on the floor. 17 Objection noted. 18 The motion stands as it is without any 19 modification, I believe. 20 MR. ANGEJA: Just to order a re-audit. 21 MS. HARKEY: To order the re-audit. 22 MS. MA: How do you -- just point of 23 clarification. How do you order a re-audit? What 24 does that mean? 25 MR. ANGEJA: The Board, if it goes -- if it 26 adopts this motion, would be ordering the Department 27 to perform a re-audit. In this case to verify, 28 first, of the chemicals that the Board's voting, 19 1 this current motion is to grant on all but one. So 2 they've got to determine how much tax applied to the 3 four that are granted, how much applied to the one 4 that's not, allow that refund. 5 And then to the four that they paid tax 6 reimbursement on, that this Board is also granting, 7 verify the amount that's available to claim as a 8 deduction after allowing the refund of the use tax. 9 That's all far more easily accomplished in a 10 re-audit than anything I could try to present 11 today. 12 MS. MA: And so how long is this process 13 going to take? 14 MR. ANGEJA: It's a New York case. I was 15 questioning that. We could do a 30/30/30. 16 And, Mr. Runner, you had once asked if we 17 were that strict in those time frames. If more time 18 were needed, I would assume and hope that, subject 19 to the Chair and the Chief of Board Proceedings, we 20 would be able to allow more time as needed. But the 21 re-audit usually is a -- I'm thinking it can be done 22 within the 90 -- the 30-day -- 90 -- 30/30/30 23 process. If extra time was needed to do this, they 24 could do it. 25 And then a 30/30/30, if we went that route, 26 would allow the path to come back. There's also the 27 petition for re-hearing process. 28 My guess is this result is acceptable to 20 1 the taxpayer, so I don't know that we need that 2 30/30/30. So I'm not suggesting it, but I'm putting 3 it out there as a choice. 4 MR. RUNNER: Yeah. I mean I -- I mean I 5 assume what we're trying to do here is the re-audit 6 is basically not a re-audit of -- 7 MR. ANGEJA: Not to increase. 8 MR. RUNNER: Yeah. It's not a re-audit in 9 the sense we're going to go in and look at all their 10 books and take a look at everything. 11 MS. HARKEY: Right. 12 MR. RUNNER: This is just to try to 13 identify with each of these chemicals -- 14 MS. MA: The one chemical. 15 MR. RUNNER: -- the proper allocation. 16 MR. HORTON: Well -- 17 MR. ANGEJA: And implement this Board's 18 order. 19 MR. HORTON: Well -- strike that. 20 MR. RUNNER: Isn't that what I -- that's 21 what my understanding would be. 22 MR. HORTON: Let me clarify. I don't 23 believe that the Department has that authority if 24 the motion on the floor actually passes. 25 I think what the re-audit does, it takes a 26 look at excess tax reimbursement and determines 27 whether or not they actually paid the tax to the 28 Board and -- 21 1 MS. HARKEY: Prior to refunding. 2 MR. HORTON: -- therefore entitled to a 3 claim for refund, or did not pay the tax and 4 therefore not entitled to -- to a refund directly to 5 them, of which they will ultimately refund the funds 6 back to the individuals that they paid it to, I 7 would presume. 8 MR. ANGEJA: They would get a refund of the 9 use tax that they self-accrued -- 10 MR. HORTON: Self-reported. 11 MR. ANGEJA: -- and paid to the Board, or a 12 use tax that they paid to out-of-state retailers is 13 subject to Department verification. 14 Regulation 1701 -- I believe, it's 1701 -- 15 the tax paid purchases resold deduction regulation 16 allows the retailer to claim -- file a claim for 17 refund. 18 So normally they would have to, as excess 19 tax reimbursement, but that's not this situation. 20 They paid tax reimbursement on something that 21 potentially this Board would decide was for resale. 22 So they would have paid a tax paid -- they were 23 entitled to a tax paid purchases resold deduction. 24 Only need to verify is to make sure there's a 25 liability against which to offset that. 26 MS. HARKEY: So that's the nature of the 27 audit. 28 MR. HORTON: Right. 22 1 MR. ANGEJA: It would be mechanical. The 2 current motion is to -- 3 MS. MA: Right. Mechanical's good. I just 4 didn't want to like -- 5 MR. HORTON: Yeah. 6 MR. ANGEJA: It doesn't expose -- 7 MS. MA: -- sending auditors to New York. 8 MR. ANGEJA: Right. 9 MS. HARKEY: You're in charge in New York. 10 MR. ANGEJA: It doesn't expose further 11 liability. It's not an opportunity to try to 12 increase -- 13 MR. HORTON: Yeah. 14 MR. ANGEJA: -- the measure. It's just to 15 implement this Board's order. According to this 16 motion, if it were to pass, you're granting four 17 chemicals and not as to one. They've got to make 18 that happen and then they compute the use tax. 19 MR. RUNNER: And I thought -- maybe I'm 20 missing it, but I thought even in the discussion 21 with the taxpayer they acknowledged that that would 22 be something that would need -- that they were open 23 to. Did I miss that? 24 MR. ANGEJA: They didn't object. 25 MR. RUNNER: They didn't object. It was 26 part of the discussion. 27 MR. ANGEJA: I'm not going to speak for Mr. 28 Vinatieri -- 23 1 MR. RUNNER: Right. 2 MR. ANGEJA: -- and say he agreed. 3 MR. RUNNER: Yes, okay. 4 MR. HORTON: The other thing I would 5 encourage staff to take a look at -- I mean these 6 chemicals are common chemicals that are being used 7 in this purpose on a number of different levels. 8 And so I -- if this -- you know, if the -- 9 if the motion passes and it's the will of the Board, 10 I would encourage staff to take a look at all the 11 other potential claims for refunds which will be in 12 the hundreds of millions of dollars relative to this 13 and to protect those refunds to move forward to -- 14 to -- to protect those refunds and to notify the -- 15 the industry of the Board's decision to -- to do 16 this. 17 Not that I'm interested in protecting them 18 because I think they owe the tax and the tax is due. 19 Let me be clear here. But I'm just doing my due 20 diligence, my responsibility as it relates to the 21 Members, to make sure that we cover all that. 22 There's a motion and a second. 23 Objection noted. 24 Further discussion, Members? 25 Hearing none, Ms. Richmond, please call the 26 roll. 27 MS. RICHMOND: Mr. Horton. 28 MR. HORTON: No. 24 1 MS. RICHMOND: Ms. Harkey. 2 MS. HARKEY: Aye. 3 MS. RICHMOND: Mr. Runner. 4 MR. RUNNER: Aye. 5 MS. RICHMOND: Ms. Ma. 6 MS. MA: Aye. 7 MS. RICHMOND: And Ms. Stowers. 8 MS. STOWERS: No. 9 MS. RICHMOND: Motion carries. 10 ---oOo--- 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 25 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 January 26, 2016 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 25 constitute 14 a complete and accurate transcription of the 15 shorthand writing. 16 17 Dated: January 28, 2016 18 19 20 ____________________________ 21 KATHLEEN SKIDGEL, CSR #9039 22 Hearing Reporter 23 24 25 26 27 28 26