1 BEFORE THE CALIFORNIA STATE BOARD OF EQUALIZATION 2 5901 GREEN VALLEY CIRCLE 3 CULVER CITY, CALIFORNIA 4 5 6 7 8 9 REPORTER'S TRANSCRIPT 10 NOVEMBER 15, 2017 11 (Prepared from audio recording) 12 13 14 15 FINAL ACTION 16 ITEM B7 17 LESLIE'S HOLDINGS, INC. & SUBS. 18 NO. 955278 19 20 21 22 23 24 25 26 27 REPORTED BY: Jillian M. Sumner 28 CSR NO. 13619 1 1 P R E S E N T 2 For the Board of Equalization: Diane L. Harkey 3 Chair 4 Fiona Ma, CPA Member 5 Jerome E. Horton 6 Member 7 Sen. George Runner (Ret.) Member 8 Yvette Stowers 9 Appearing for Betty T. Yee, State Controller 10 (per Government Code Section 7.9) 11 Joann Richmond 12 Chief Board Proceedings 13 Division 14 For Franchise Tax Board: Laura Taing 15 Tax Counsel 16 Craig Swieso Tax Counsel 17 For Taxpayer: 18 Steve Weddell Taxpayer 19 Brook Hicks 20 Taxpayer 21 Kathy Freeman Representative 22 23 24 25 ---oOo--- 26 27 28 2 1 5901 GREEN VALLEY CIRCLE 2 CULVER CITY, CALIFORNIA 3 NOVEMBER 15, 2017 4 ---o0o--- 5 MS. STOWERS: Go back to Leslie's Pool. 6 MS. HARKEY: Yes. Yes, I guess we can go 7 back to Leslie's Pool. I can't remember even where 8 we were on that. 9 MR. RUNNER: We were trying to come up with 10 a motion. 11 MS. HARKEY: Oh, come up with a real motion. 12 MS. STOWERS: I have a motion that I think 13 will be acceptable to the Members. 14 MS. HARKEY: All right. Thank you. 15 MS. STOWERS: I move to partially grant the 16 appeal by allowing 16 percent of the claimed interest 17 expense as business income -- as business. On the 18 basis that 16 percent of the loan was used to -- was 19 used to provide a dividend to the employees. Which 20 is part of their operation. 21 MR. RUNNER: Second. 22 MR. HORTON: Members, I would object. 23 Hoechst Celanese is relatively clear in that. And so 24 I can't see the link in the loan and the interest 25 providing for any business advantage, business 26 benefit. 27 And to remain consistent with our -- my 28 previous vote on the Bank America case, I'm going to 3 1 object. 2 MS. HARKEY: Okay. 3 Please call the roll. 4 MS. RICHMOND: Chairwoman Harkey. 5 MS. HARKEY: Aye. 6 MS. RICHMOND: Mr. Runner. 7 MR. RUNNER: Aye. 8 MS. RICHMOND: Mr. Horton. 9 MR. HORTON: No. 10 MS. RICHMOND: Ms. Ma. 11 MS. MA: Aye. 12 MS. RICHMOND: Ms. Stowers. 13 MS. STOWERS: Aye. 14 MS. RICHMOND: Motion carries. 15 MS. HARKEY: Okay. Good. Business done. 16 We'll be back in by -- let's say 1:30. 17 Is that okay with everybody? 18 (Whereupon a break was taken.) 19 MS. HARKEY: Members, I have -- we're 20 resuming after lunch. I have a request to reopen 21 the -- 22 MR. HORTON: Leslie's. 23 MS. HARKEY: Leslie's Pool, which is really 24 not Leslie's -- what is the case? Leslie's Holdings. 25 Leslie's Holdings. 26 A Member would like to change a vote. And, 27 so if we could re -- make a motion to reopen, and use 28 the same motion. 4 1 MS. STOWERS: Would you like me to make the 2 motion again? 3 MS. HARKEY: If you've got it, yes, you can 4 make the motion again. 5 MR. HORTON: Madam Chair, if I may. I think 6 we're recognizing Member Runner's motion to rescind; 7 Member Stowers -- 8 MS. HARKEY: Oh, okay. 9 MR. HORTON: -- I think she rescinded. 10 MS. HARKEY: Okay. Is there any objection 11 to rescinding the motion? 12 No. 13 Okay. Fine. Thank you. 14 And, Ms. Stowers, will you please reread the 15 original motion? 16 MS. STOWERS: I move to partially grant the 17 claim by allowing 16 percent of the interest as 18 business interest. On the basis that there was no 19 loan, and distribution went to 16 percent of the 20 employees, making it in line with Hoechst Celanese as 21 that it was integral to their operation and provided 22 value. 23 MR. RUNNER: Second. 24 MR. HORTON: I didn't hear the Hoechst 25 Celanese. 26 MS. HARKEY: There's a motion and there's a 27 second. And is there any objection? 28 No. 5 1 Okay. That one passes 5/0. 2 Thank you very much. 3 MR. HORTON: Thank you, Members. 4 (Whereupon the matter concluded.) 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 6 1 REPORTER'S CERTIFICATE 2 3 State of California ) 4 ) ss 5 County of Sacramento ) 6 7 I, Jillian Sumner, Hearing Reporter for 8 the California State Board of Equalization certify 9 that from November 15, 2017 audio, I recorded 10 verbatim, in shorthand, to the best of my ability, 11 the proceedings in the above-entitled hearing; that I 12 transcribed the shorthand writing into typewriting; 13 and that the preceding pages 1 through 7 14 constitute a complete and accurate transcription of 15 the shorthand writing. 16 17 Dated: September 14, 2018 18 19 20 ____________________________ 21 JILLIAN SUMNER, CSR #13619 22 Hearing Reporter 23 24 25 26 27 28 7