Chapter 2. General Business Assets 1. Guidelines for Ascertaining the Fair Market Value of Office Furniture and Equipment, Machinery and Equipment and Other Assets Used In General Business Activity A. Because the information necessary to use the market and income approaches to value is generally not available, the fair market value of office furniture and equipment, machinery and equipment and other assets used in general business activity can generally best be estimated by the cost approach. This approach allows the assessors across the State of Louisiana to fairly and uniformly assess business and industrial personal property, while, at the same time, allowing each assessor the discretion that is necessary to accommodate modernization, facelifting of equipment, and obsolescence. B. The following data is required to use the cost approach to value: 1. total acquisition costs of equipment including freight, installation, taxes and fees, as well as, date of purchase; 2. an index that adjusts the cost for the effects of inflation;. the average expected economic life of the equipment; 4. a typical depreciation schedule for the equipment; and. information to determine external (economic) and/or functional obsolescence, if any. C. The assessor should obtain from the taxpayer the acquisition cost of the equipment, the actual age of the equipment, and any information that may reflect on the average economic life and fair market value of the equipment. These regulations, as adopted by the Louisiana Tax Commission, contain guidelines for average economic life, typical depreciation schedules and cost indices. D. Three different procedures are defined for establishing fair market value when using the cost approach: Procedure 1 shall be used for the typical business and industrial personal property which has an average economic life equal to the guidelines, and that has not incurred any external (economic) and/or functional obsolescence. Alternative Procedure 2 should only be used for the business and industrial personal property which has an average life that is either lower or higher than the guidelines. Alternative Procedure should only be used for the business and industrial personal property that has incurred external (economic) and/or functional obsolescence. An assessor or taxpayer wishing to deviate from Procedure 1 shall bear the burden of proving that the alternative procedure elected establishes the fair market value of the property. GB - 1 (0)
E. Composite multipliers are computed for the assessor in Procedure 1 and presented in Table.D. These tables shall be updated annually by the Tax Commission in order to comply with uniform assessment of personal property. F. Procedure 1 1. This procedure for establishing the fair market value of business and industrial personal property (excluding oil and gas properties, drilling rigs, inventories and leased equipment), includes these steps: a. classify the personal property according to the classifications listed in Table.A; b. the classification table will refer the assessor to the correct composite multiplier table. The composite multiplier is a composite of the cost index and the percent good; c. select the correct composite multiplier from this table, based on the actual age of the equipment (See example below); d. multiply the composite multiplier times the acquisition cost of the equipment. The result is the fair market value of the equipment. e. in the year in which the personal property has reached its minimum percent good, the applicable composite multiplier in use at that time is frozen. For the assessment years that follow, the RCNLD value does not change until the personal property is permanently taken out of service. An exception to this rule applies when the property has been reconditioned to extend its remaining economic life. 2. For example, the age 1 composite multiplier applies to personal property purchased the year prior to the year it is being assessed (two years back for Orleans Parish) and so on for the other ages. G. Alternative Procedure 2 1. If an assessor determines that economic lives are over or understated for certain personal property, an appropriate composite multiplier can be derived as illustrated below: a. select the average economic life of the personal property based on information available; b. go to Table.C and select the percent good based upon the actual age of the property; c. select the appropriate cost index from Table.B based on GB - 2 (07)
the year of acquisition; d. multiply the percent good times the cost index to calculate the composite multiplier; e. multiply the composite multiplier times the acquisition cost of the personal property in order to derive the fair market value of the personal property. f. in the year in which the personal property has reached its minimum percent good, the applicable composite multiplier in use at that time is frozen. For the assessment years that follow, the RCNLD value does not change until the personal property is permanently taken out of service. An exception to this rule applies when the property has been reconditioned to extend its remaining economic life. 2. This procedure should only be used if the assessor has proof that the average economic life of the personal property is different from the average economic life as provided in the guidelines. Otherwise, use Procedure 1 to calculate the fair market value. H. Alternative Procedure 1. This procedure should be used only if external (economic) and/or functional obsolescence has affected the fair market value of the business and industrial personal property. External (economic) and/or functional obsolescence are defined in Section 01 of these rules and regulations. This procedure is to be used for Salt Dome Storage Wells & Caverns permitted as Class II Type, 11-L or 11-N. Negative economic obsolescence may occur resulting in a positive adjustment known as munificence. 2. The steps are: property; a. acquire the acquisition cost and year acquired of the personal b. multiply the acquisition cost times the cost index that corresponds to the year acquired from Table.B; c. multiply the number derived in Step b. by the percent good that corresponds to the year acquired from Table.C.; d. adjust the number derived in Step c. for functional obsolescence/munificence, if any; e. adjust the number derived in Step d. for external (economic) obsolescence, if any; the result is the fair market value of personal property that has been affected by external (economic) and/or functional obsolescence/munificence. GB - (16)
f. in the year in which the personal property has reached its minimum percent good, the applicable composite multiplier in use at that time is frozen. For the assessment years that follow, the RCNLD value does not change until the personal property is permanently taken out of service. An exception to this rule applies when the property has been reconditioned to extend its remaining economic life.. Procedure shall be used to develop fair market value when supporting data for the analysis of economic and/or functional obsolescence has been submitted. 4. If external (economic) and/or functional obsolescence/munificence, when documented and supported by the taxpayer, is not included in the valuation when warranted, a value greater or lower than fair market value will result.. Otherwise, use Procedure 1 to calculate the fair market value. AUTHORITY NOTE: Promulgated in accordance with R.S. 47:22. HISTORICAL NOTE: Promulgated by the Department of Revenue and Taxation, Tax Commission, LR :2 (February 192), amended LR :94 (November 194), LR :6 (January 196), LR 1:97 (December 199), LR 16:6 (December 1990), LR 17:1 (December 1991), LR 19:2 (February 199), amended by the Department of Revenue, Tax Commission, LR 1:719 (March 0), LR :49 (March 07), LR 4:6 (April 0), LR :00 (March 09), amended by the Division of Administration, Tax Commission, LR 42: GB - 4 (09)
. Tables Ascertaining Economic Lives, Percent Good and Composite Multipliers of Business and Industrial Personal Property Table.A Suggested Guidelines For Ascertaining Economic Lives of Business and Industrial Personal Property The following alphabetical list includes most of the principal activities and types of machinery and equipment used in business throughout this state. The years shown represent an estimate of the average economic life of the equipment as experienced by the particular business or industry. The actual economic life of the assets of the business under appraisal may be more or less than the guidelines shown. The assessor must use his best judgment, in consultation with the property owner, in establishing the economic life of the property under appraisal. Business Activity/Type of Equipment Agricultural Machinery & Equipment Feed Mill Equipment (Production Line) Average Economic Life In Years Air Conditioning & Heat Repair Air Conditioning Single Room Unit Aircraft Parts Mfg. M & E All Terrain Vehicles Aluminum Industry M & E Amusement Devices (Music, Pinball Mach., etc. Inflatable Air Bouncers VCR & DVD Players Video Games Video Poker Gaming Equipment Amusement & Theme Parks Antenna (ex. Mounted on Towers) for CATV, etc. Apparel Mfg. M & E Auto Parts Retail Auto Quick Service GB - (07)
Auto Repair M & E Diagnostic Equipment (Electronic) Paint Booths Small Tools Bakeries: Industrial (i.e. Holsum, Sunbeam Bread ) Commercial (i.e. Albertson's, Mom & Pop, etc.) Banks Alarm Systems Automatic Teller Machines (ATM's) Encoders Furniture & Fixtures Safety Deposit Boxes Vault Doors Video Equipment Barber & Beauty Shops Tanning Beds Billboards, Poster Panels & Bulletin Boards 1 Bleach Mfg. M & E Blueprinting, Photostating, Mimeographing & Lithographing (non - electronic) Boat Molds (fiberglass) Book Bindery Bottling & Soft Drinks Mfg. M & E Bowling Lanes Automatic Pinsetters & other M & E Brewing & Distilling M & E Butcher Shops C.A.T.V. Equipment Cablevision Systems Headend Active (Equipment & Tower) House Drops & Converters P & E (Distribution) Test Equipment & Tools Tower Cabinet Shop M & E GB - 6 (07) 1 2 2
Candy & Confections Mfg. M & E Cannery M & E Car Wash ( min. & coin-op) Cash Registers & Scanners (Also See Supermarkets) Cellular/PCS Antennas Cellular/PCS Telephone Handsets Electronics Leasehold Improvements Power and Batteries Software Switching Towers Cellular/PCS and Microwave Transmission Cement, Clay & Brick Prods. Mfg. M & E Chemical Industry M & E 1 Chiropractic Equipment Clothing Mfg. M & E Cocktail & Beer Bars Coin-op Machines Cold Storage Warehouse Equipment Compressors (General Business Assets Only) Computers Desktops Handhelds Laptops Main Frame Midrange Peripherals Personal Computers Servers Concrete Products M & E 1 GB - 7 ()
Construction M & E Cranes, Crawler General Construction Asphalt Plants Portable Stationary Land Clearing Marine Construction Ships & Vessels Pleasure Craft Mobile Telescopic Road Construction (heavy) Rock Crushing Portable Stationary Sewer & Utilities Well Drilling (other than O & G) Container Mfg. M & E Converters (Residential Type) Coolers (walk-in) Coolers Water (Installed/Water Fountain) Water (Portable) Water Bottles ( gallon) Copy Machines Costumes (rental) Cotton Gins Cranes (crawler) Credit Card Machine (In Store Swipe-type) Credit Card Machines (See Supermarket POS) Dairy Processing M & E Day Care (Exclude Office, Kitchen & Computer Assets) Dental Equipment Department Store Furniture & Equipment Dies & Molds Digital Cameras & Recorders GB - (07)
Dispensing Machinery (coin-op) Distilling & Brewing M & E Doctors, Dentists & Professional Equipment Drug Store F & F Dry Cleaning & Laundry M & E (Except Coin-op) (Coin-op) Electrical Generating Gas & Diesel Steam Electrical Mfg. M & E 1 Electrical Transmission & Distribution 2 Electronic Equipment Electronic Mfg. Equipment Feedmill M & E Fertilizer Applicators Fertilizer Mfg. M & E Fiberglass Molds Fish Processing M & E Fitness Equipment Electronic Manual Florist Retail (Except Computers and Other Office Equipment) Flour, Cereal & Grain Milling Food Processing M & E Forklifts Inside Outside Foundry M & E Fruit Bins & Cargo Pallets 2 GB - 9 (07)
Gaming Equipment: Casino Riverboats (See: Riverboat Casinos) Electronic, Slots or Computers Lotto Machines Mechanical, Slots All Other Gaming Equipment Garage M & E General Contractor M & E Golf Carts Golf Course Equipment Golf Course Tractors GPS Receivers (Hand Held) Greenhouse & Nursery M & E Grocery Store F & F Grocery Store Walk-in Coolers Hardware Store F & F Hatchery M & E Health Spa Equipment Hospital & Nursing Home Equipment High Tech (Computer Driven) Equipment Hotel F & F Ice Cream Cabinets Ice & Refrigeration M & E Iron & Steel Industry M & E 2 Janitorial Service M & E Jewelry Store F & F and Equipment Key Duplication Equipment Laboratory Equipment (Non-Electronic) Landscaping M & E Laundry & Dry Cleaning M & E (Except coin-op) (Coin-op) 1 GB (11)
Leather Products Mfg. M & E Libraries (Professional) 1 Lift Trucks (See: Forklifts) Lumber & Wood Products Industry Logging M & E Log Stackers Pulp, Paper & Paperboard M & E Plywood & Veneer M & E Scarifying M & E Sawmills Portable Stationary Shake & Shingle Mills Portable Stationary Machine Shop M & E (Maintenance) Machine Shop M & E (Production) Mailing Machines Meat Packing M & E Meat Processing M & E (Complex) Medical Equipment Computer Driven Metal Fabrication & Extrusion Mfg. M & E Metal Sheet Fabrication Mining, Milling & Quarry M & E Mobile Yard Equipment Modular Office Buildings (portable) 1 Mortuary Service Equipment Motel Furniture & Equipment Movie (Film Making) Music Instruments (Rental) Music Studio Recording Equipment GB 11 (07)
Music Systems (Background) Neon Signs Newspaper M & E Press Photographic Other M & E Nursing Home Equipment Mattresses Nursery & Greenhouse M & E Office Copy Machines, Faxes & Printers Office Electronic Machines Office F & F Office Mailing Machines Office Safes 2 Oilfield Rental Tanks 1 Outdoor Advertising Structures (See: Signs) Oxygen & Acetylene Tanks 2 P.A. Systems Packing & Sorting M & E (Fruit, Vegetables, etc.) Paint & Varnish Mfg. M & E Pallets, Crates, Lugs, Bins, etc. Petroleum Products Industry Bulk Station Equipment Refining M & E Service Station Equipment* Photography Equipment One-hour Photo processing Equipment Plastic Extrusion Equipment Plastic Illuminated Signs Plumbing Shop Equipment Plywood & Veneer Mfg. M & E Pollution Control M & E 1 GB (07) 1 1 2
Pool Hall Equipment Portalets Poultry Plants M & E Power & Generation M & E Gas & Diesel Steam Printing & Publishing Equipment (See: Newspaper) Professional Equipment Scientific, Doctors, Dentists, etc. Libraries Propane Tanks 2 Pulp & Paper Mfg. M & E Radio & Television Broadcasting Equipment C.A.T.V. (Cable Systems) Digital Radio Equipment Radio - Telephone Equipment - 2-Way Recording Equipment Service & Repair Equipment Towers Rental Equipment Linens Public U-Rent (except heavy equipment) Tuxedos Video Tape, DVD & Game Rental Research & Development M & E Restaurants, Soda Fountains & Drive-Ins Retail Stores F & F Riverboat Casinos Required to cruise Dockside on a permanent basis Rock Crushers (See: Construction) Salt Dome Storage Wells & Caverns (LDNR Class II Type, 11-L or 11-N) 0 Sawmills (See: Lumber) GB 1 (16) 2 1 1
Scaffolding (rental) Search Lights Service Station Equipment * Sewer Construction Equipment Sewing Equipment Sheet Metal Fabrication Shipbuilding (See: Construction) Shoes & Leather Products Mfg. M & E Shipyards (See: Construction) Signs Bulletin Boards Billboards Neon Plastic Illuminated Poster Panels Electronic Three-sided Billboard Small Tools perishable Smelting M & E Soft Drink Mfg. M & E (Batch) Storage Buildings (portable) Stores Retail Wholesale Sugar Cane Refining Supermarkets Cash Registers & Scanners PA Systems (Public Address) POS Computer Systems Walk-in Coolers Surveying Equipment (Also See Professional Equipment) Tavern & Bar Equipment Telecommunications Equipment (electronic) Fiber Optic Cable (buried) Fiber Optic Cable (exposed) GB 14 (0) 1 1 1 1
Telephone & Intercom Systems Electronic Manual (non-electronic) Television & Radio (See: Radio) Textile, Tent & Awning Mfg. M & E Theater F & F Projection Equipment Tire Recapping Equipment Toilets, Portable Towers Cellular Microwave Tuxedo Rental Unclaimed Vehicles Upholstery Equipment VCR & DVD Equipment (If Rental Units, See Rental) Vending Machines Video Games Video Poker Gaming Equipment Warehouse Equipment Water Systems Welding Shop Equipment Wholesale Stores Winery Equipment Woodworking Shop M & E X-Ray Equipment 1 * If acquisition cost and age of service station equipment are not available, see Chapter 9, Table 907.B-2, for alternative assessment procedure. GB 1 (07)
Year Age Table.B Cost Indices National Average 1926 = 0 January 1, 17 = 0* 17 1 16.2 0.990 16 2 10.9 1.0 1 19.7 1.002 14 4 17. 1.011 1 1.7 1.024 6 14.9 1.02 11 7 10.2 1.062 147.4 1.09 09 9 146.6 1.07 0 1427. 1.11 07 11 17. 1.162 06 102. 1.226 0 1 44. 1.2 04 14 117. 1.79 0 1 111.6 1.427 02 16 10.0 1.41 01 17 9.4 1.460 00 1 4. 1.472 1999 19 6.0 1.499 199 61. 1.0 1997 21 2.7 1.16 1996 22 6.0 1.41 199 2.4 1.64 1994 24 9.0 1.6 199 2 9.0 1.666 1992 26 99. 1.69 1991 27 92. 1.719 1990 2 9.2 1.74 199 29 6. 1.00 19 0 41.4 1.97 197 1 06.9 1.97 *Reappraisal Date: January 1, 17 196.1 (Base Year) GB 16 (1)
Table.C Percent Good Age Yr Yr 6 Yr Yr Yr Yr 1 Yr Yr 2 Yr 0 Yr 1.70..7.90.92.94.9.97.9.9 2.49.69.7.79.4.7.90.9.9.97.4.2.7.67.76.0..90.9.9 4.16.4.41.4.67.7.79.6.90.9.2.0.4..66.7.2.7.91 6.1.19..49..6.7.4.9 7.1.26.9.0.62.74.1.6.22.0.4..70.7.4 9..24.6.49.6.7.2.21.29.4.60.71.79 11..24.7..6.76.22.1.0.64.74 1..26.4.60.71 14.2.40.6.6 1.21..2.6 16..1.4.61 17.27.44. 1.24.9.4 19.22.4.1.21.0.47 21..2.44 22.26.40 2.24.7 24..4 2..1 26 27 2 29 0 1..2.26.2.21.. GB - 17 (16)
Table.D Composite Multipliers 1 (19 Orleans Parish) Age Yr Yr 6 Yr Yr Yr Yr 1 Yr Yr 2 Yr 0 Yr 1.69.4.6.9.91.9.94.96.97.97 2.49.70.74.0...91.94.96.96.4.2.7.67.76.0..90.9.9 4.16.4.41..6.74.0.7.91.94.24.1.44.9.6.7.4.9.9 6.19..4.1.60.70.0.7.92 7.19.2.41..66.79.6.91.24..47.60.77..90 9.22.26.9..71.2.9.2.2.4.67.79. 11.2.2.4.64.79..27..61.7.7 1.26...77.7 14.2..77.6 1.0.0.74.6 16.29.4.70.6 17.9.64. 1..7.79 19..1.76.2.4.71 21.0.42.67 22.40.62 2.. 24.2. 2.1.2 26 27 2 29 0 1 GB - 1 (1).0.4.4.40...7
Data sources for tables are: 1. Cost Index - Marshall and Swift Publication Co. 2. Percent Good - Marshall and Swift Publication Co.. Average Economic Life - various AUTHORITY NOTE: Promulgated in accordance with R.S. 47:17 and R.S. 47:22. HISTORICAL NOTE: Promulgated by the Department of Revenue and Taxation, Tax Commission, LR :2 (February 192), amended LR 9:69 (February 19), LR :944 (November 194), LR :6 (January 196), LR 1:1 (March 197), LR 1:764 (December 197), LR 14:72 (December 19), LR 1:97 (December 199), LR 16:6 (December 1990), LR 17:1 (December 1991), LR 19:2 (February 199), LR :19 (February 1994), LR 21:16 (February 199), LR 22:117 (February 1996), LR 2:7 (February 1997), amended by the Department of Revenue, Tax Commission, LR 24:490 (March 199), LR 2:17 (February 1999), LR 26:09 (March 00), LR 27:427 (March 01), LR 2: (March 02), LR 29:70 (March 0), LR 0:49 (March 04), LR 1:719 (March 0), LR 2:4 (March 06), LR :496 (March 07), LR 4:66 (April 0), LR :00 (March 09), LR 6:70 (April ), amended by the Division of Administration, Tax Commission, LR 7:1402 (May 11), LR : (March ), LR 9:497 (March 1), LR 40: (March 14), LR 41:61 (April 1), LR 42:70 (May 16), LR 4:66 (April 17). GB - 19 (1)