Personal Property Tax

County Bulletin

TO: ALL COUNTY AUDITORS - Bulletin No. 239

FROM: Robert J. Kosydar, Tax Commissioner

DATE:  March 29, 1974

RE: Valuation of Idle Equipment

Since 1948, property no longer being held for use in the business conducted, but being held for disposal, has been permitted to be valued at ten percent of owner's cost for personal property tax purposes. The Ohio Supreme Court stated in Syro Steel Co. v. Kosydar, 34 Ohio St. 2d 9, decided April 11, 1973, that this valuation-method is arbitrary and has no statutory support. Therefore it is necessary in all cases to determine the true value in money of such property. Personal property located in buildings boarded up, or in departments closed off, or removed from the production line, is ordinarily entitled to be valued separately from that which is kept or maintained as part of a plant capable of operation, if such property has been rendered functionally inoperable and is held for disposal as of tax listing day. The taxpayer must identify such property separately in the tax return, with an explanation of the circumstances and the basis for valuation. Temporary idleness for purpose of overhauling and repair or resulting from seasonal Operation or from reduced usage is not sufficient cause for separate valuation. Such qualifying property is to be separately valued as follows:1. If component parts have been removed and the remainder is useless in the business, the actual scrap or salvage value shall be taken as the true value.2. If visual inspection confirms that its useful life has not ended, the true value shall be the greater of its depreciated book value or the actual salvage value.3. If it has been offered for sale, a bona fide asking price shall be taken as the true value; but if it has been sold subsequent to tax listing date through an arm's-length transaction, the selling price shall be taken as the true value. Where the value reported is less than depreciated book value, the taxpayer must file a claim for deduction from book value in writing at the time of making his return.

The unnumbered Directive on this subject, issued June 1, 1948, is hereby rescinded.