Articles Posted in Tax Law

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The Supreme Court reversed the decision of the Board of Tax Appeals (BTA) affirming the tax commissioner’s order of two reductions that decreased Dana Corporation’s amortizable amount against the commercial-activity tax (CAT) to $4,728,051. At issue was the special credit against the CAT set forth at Ohio Rev. Code 5751.53. One factor in calculating the CAT credit was the net operating losses (NOLs) that were incurred by the corporation before the CAT. To take the credit, Dana Corporation was required to file report with the tax commissioner that calculated an amount that would be applied gradually over a period of up to twenty years (amortizable amount) against the CAT. Dana Corporation argued that its amortizable amount was $12,493,003. The tax commissioner ordered two reductions that ultimately decreased the amortizable amount to $4,728,051. On appeal, Dana argued that the second adjustment was not authorized by 5751.53(F). The BTA disagreed. The Supreme Court reversed, holding that the BTA erred in affirming the reduction of the amortizable amount based on cancellation-of-debt income offset of federal NOLs. View "Dana Corp. v. Testa" on Justia Law

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The Supreme Court affirmed the decision of the Board of Tax Appeals (BTA) finding that the “casualty-loss exception” to the general rule prohibiting successive valuation complaints within the same triennium applied in this case. Appellees filed a new valuation complaint for tax year 2013 even though they had already filed a complaint challenging the 2012 valuation of their property. The Board of Revision (BOR) ordered no change in value for 2013. The BTA found that the casualty-loss exception applied because Appellees’ evidence of damage to the property was not “truly considered” in determining the property’s value for 2012 and that the tax-year-2013 complaint was permissible. The Supreme Court affirmed, holding that the BTA acted reasonably and lawfully in determining that the BOR had jurisdiction over Appellees’ tax-year-2013 complaint. View "Glyptis v. Cuyahoga County Board of Revision" on Justia Law

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The Supreme Court reversed the decision of the Board of Tax Appeals (BTA) concluding that Taxpayer’s challenge to the taxable value assigned to its property for tax year 2012 was barred because taxpayer waited too long to notify the Board of Revision (BOR) that it wished to pursue a continuing complaint for tax year 2012. Taxpayer did not file a new complaint for the 2012 tax year but, rather, relied upon the continuing-complaint jurisdiction provided for in Ohio Rev. Code 5715.19(D). The Supreme Court held that the time limitation imposed by the BTA was contrary to the plain language of Ohio Rev. Code 5715.19(D) and that, under the statute, the BOR had continuing-complaint jurisdiction to consider Taxpayer’s request for tax year 2012. View "MDM Holdings, Inc. v. Cuyahoga County Board of Revision" on Justia Law

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The 36-unit North Canton apartment complex went into foreclosure.The lender obtained a judgment of $1,700,000. There were no bids at a sheriff’s sale with a minimum bid of $1,400,000. The receiver marketed the property through a national brojkerage firm, which, in a mass-mailing flyer showed a price of $1,325,000. The marketing materials did not mention the sheriff’s sale. There were 17 inquiries and at least six offers to purchase, ranging from $820,000 to $1,200,000, from LFG. There was no relationship between LFG and the receiver or the former owner. The court approved a sale as “commercially reasonable.” Title transferred to LFG in 2011. LFG sought to reduce the property’s tax-year-2012 valuation from $1,841,300 to $1,200,000. The Board of Education filed a counter-complaint. The board relied on “strong testimony” by LFG and “good evidence” that the property was marketed over time and that the price represented fair market value. The Board of Tax Appeals reinstated the auditor’s valuation. The Supreme Court of Ohio reversed, with the instruction that the $1,200,000 sale price be used as the property’s true value for tax purposes. Under the “forced sale” provision of R.C. 5713.04, a forced sale gives rise to a rebuttable presumption that the sale price is not the true value. In this case, the presumption was rebutted by ncontradicted evidence that the transaction at issue was at arms length. View "North Canton City School District Board of Education v. Stark County Board of Revision" on Justia Law

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Notestine, a nonprofit corporation with 26 U.S.C. 501(c)(3) status as a charitable institution, owns the 11-unit residential rental property developed as low-income housing under 12 U.S.C. 1701q. Construction costs were $1.5 million. The federal capital advance was $1.3 million. The “project rental assistance” contract requires tenants to be at least 62 years old and have income under 50 percent of the area median. Rent is tied to tenant income at $407 per month, including utilities, with any overage payable to HUD. Tenants pay up to 30 percent of their adjusted gross income on rent, with HUD subsidizing any difference. Capital Advance Program Use and Regulatory Agreements were recorded on title, in effect at least 40 years from 2013, unless released by HUD. An auditor valued the property at $811,120 for 2013, a Logan County reappraisal year. Notestine sought a reduction, arguing that the building's value was $165,000, based on actual rent and expenses. The Board of Tax Appeals adopted the opinion of Notestine’s appraiser, who valued the property at $75,000. The Supreme Court of Ohio affirmed. Although market rents and expenses constitute a “rule” when valuing low-income government housing generally, that rule is presumptive, not conclusive. In this case, the rents are minimal, and federal subsidization is strictly controlled by HUD-imposed restrictions on the accumulation of surpluses. There is no evidence that any adjustment from contract rent to market rent would eliminate the “affirmative value” of government subsidies. View "Notestine Manor, Inc. v. Logan County Board of Revision" on Justia Law

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The Supreme Court reversed the decision of the Board of Tax Appeals (BTA) dismissing NASCAR Holdings, Inc.’s notice of appeal solely because it was filed by an attorney who was not licensed to practice law in Ohio. The Department of Taxation issued an assessment against NASCAR for $549,520. The Tax Commissioner affirmed the assessment. NASCAR filed a notice of appeal to the BTA. The notice was signed by a Florida-based attorney who was not licensed to practice law in Ohio. The BTA dismissed the appeal, finding that the attorney had engaged in the unauthorized practice of law when he prepared and filed the notice of appeal on NASCAR’s behalf and that this rendered the notice of appeal void ab initio, thereby depriving the Board of jurisdiction over NASCAR’s appeal. The Supreme Court reversed, holding that the BTA erred in not applying Jemo Associates, Inc. v. Lindley, 415 N.E.2d 292 (Ohio 1980), to the facts of this case. View "NASCAR Holdings, Inc. v. Testa" on Justia Law

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The Supreme Court vacated the decision of the Board of Tax Appeals (BTA) denying Appellant’s request to reduce the value of residential property he owned during the 2013 tax year. The subject property consisted of a .13-acre parcel improved with a single-family home. For tax year 2013, Appellant requested that the Board of Revision (BOR) reduce the fiscal officer’s valuation from $88,600 to $6,000. The BOR retained the fiscal officer’s valuation. The BTA also retained the fiscal officer’s valuation, concluding that Appellant failed to met his burden to adduce competent and probative evidence of value and that there was inadequate evidence to independently determine a value. The Supreme Court remanded for consideration of the evidence, holding that the BTA erred by failing to account for potentially material evidence of the property’s sale in 2009. View "Mann v. Cuyahoga County Board of Revision" on Justia Law

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The Supreme Court affirmed the decision of the Board of Tax Appeals (BTA) and Board of Revision (BOR) to retain the county fiscal officer’s valuation of real property owned by Appellant. The subject property consisted of a single-family dwelling located on a half-acre parcel in the city of Beachwood. For tax year 2013, Appellant filed a complaint seeking to reduce the fiscal officer’s valuation from $1,429,100 to $850,000. The Supreme Court affirmed the BTA’s decision, holding (1) Appellant’s value-related arguments and procedural arguments were unavailing; and (2) Appellant failed to show that the BTA acted unreasonably or unlawfully. View "Jakobovitch v. Cuyahoga County Board of Revision" on Justia Law

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The Supreme Court affirmed the decision of the Board of Tax Appeals (BTA) determining that the subject property in this case should be valued in 2013 according to its 2012 sale price of $550,000. The property was retail property that was split from a larger parcel and sold to Appellee. For tax year 2013, the auditor valued the subject property at $2,199,700. Appellee filed a valuation complaint asking for a reduction to $850,000 - the same value attributed to the undivided parcel for tax year 2012. The Board of Revision (BOR) reduced the new parcel’s value to $1,282,740. The BTA rejected the BOR’s valuation and valued the property at $550,000, finding that the 2012 sale was a recent arm’s-length transaction. The Supreme Court affirmed, holding that the BTA’s decision was reasonable and lawful. View "Huber Heights City Schools Board of Education v. Montgomery County Board of Revision" on Justia Law

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The Supreme Court affirmed the decision of the Board of Tax Appeals (BTA) reversing the tax commissioner’s determination finding that certain apartment buildings did not qualify for an exemption under Ohio Rev. Code 5709.87. Appellee, the owner of the property in question, remediated the property and improved it with apartment buildings. The tax commissioner found that the apartment buildings did not qualify for a partial tax exemption under section 5709.87 - the “brownfield exemption” - for having undergone environmental cleanup. The BTA, however, concluded that Appellee was entitled to a tax exemption for the assessed value of the apartment buildings under section 5709.87. The Supreme Court affirmed, holding (1) the tax commissioner waived his main argument and one other issue by failing to raise them first before the BTA; and (2) the tax commissioner’s remaining arguments lacked merit. View "Kinnear Road Redevelopment, L.L.C. v. Testa" on Justia Law