Tax Rules: Final: 5703-3
5703-3-12 - Tangible personal
property tax; true value; exhaustion method; presumed
disposals
(A) As used in this rule, "exhaustion method" means a
procedure for valuing tangible personal property of a
business in which the cost and accumulated depreciation
reserves of furniture, fixtures, and machinery and equipment
are shown on the taxpayer's books and records as fully
depreciated, and the taxpayer maintains no records of actual
disposals of such property.
(B) Retail merchants and other taxpayers who follow the
practice of showing fully depreciated assets on the books,
whether or not physically disposed of, must value and list
these assets for taxation as long as they are held for use in
business. If the taxpayer maintains no records of disposals
of fully depreciated assets, the exhaustion method may be
used to compute the true value of this property for the
purposes of the tangible personal property tax.
(C) A taxpayer who meets the requirements of paragraph (B) of
this rule shall calculate the true value of furniture,
fixtures, and machinery and equipment as follows: The costs
of fully depreciated assets acquired during each of the ten
years preceding the year for which that class of property
reaches its minimum utility value as shown on the composite
annual allowance procedure for the current year, as
determined pursuant to rule 5703-3-11 of the Administrative
Code, shall be included. To reflect estimated disposals, the
cost shall be reduced by ten per cent for each year that the
year of acquisition precedes the year of minimum utility
value for the current tax year. The property is considered to
be totally disposed of if acquired more than nine years
before the year of minimum utility value for the current tax
year. The value of this property is computed using the
reduced cost and the minimum utility value percentage for
that class of property for the current tax year.
(D) The tax commissioner may publish detailed instructions or
examples to assist taxpayers in applying the provisions of
this rule.
Effective: 2-3-86
Promulgated under: 5703.14
Authorized by: 5703.05
Amplifies: 5711.03, 5711.18, 5711.21, 5711.22