Taxation
Ca. Tax Lawyer - 2019, VOL. 28, NO. 2
Content
- 2018-2019 California Real Property Journal Editorial Board
- 2018-2019 California Taxation Editorial Board
- 2018-2019 Executive Committee of the Real Property Law Section
- 2019-2020 Executive Committee of the Taxation Section
- Availability of the Welfare and Other Property Tax Exemptions in Real Property Leasing Transactions
- Excerpt of 2019 California Documentary Transfer Tax Table
- Feds To the Rescue: 2019 California Transfer Tax Update
- MCLE Self-Study Article: Qualified Opportunity Zones: An Uneasy Path to Significant Tax Benefits
- Message from the California Real Property Journal Editor-in-Chief
- Message from the California Tax Lawyer Editor-in-Chief
- Message from the Outgoing Real Property Section Co-Chairs
- Table of Contents
- The Section 199A Deduction: Concepts & Examples
- In Further Defense of the "Rushmore Approach" to Account For Intangible Property in Real Property Assessments
In Further Defense of the "Rushmore Approach" to Account For Intangible Property in Real Property Assessments
Michael Slattery1
Michael Slattery is Of Counsel to Lamb & Kawakami LLP in downtown Los Angeles where he practices property tax law, municipal law, bankruptcy law, and general civil litigation. Over a 37-year career, he has represented both property owners and municipalities in property tax disputes and has worked in both private and governmental law offices. Mike is a past Chair of the Business Law Section Financial Institutions Committee.
California assessors cannot directly tax intangible assets, but may assume the presence of intangibles assets that are necessary to put taxable property to its highest and best use.2 For larger hotel properties, the necessary intangible assets are a franchise agreement and a management agreement and the workforce, trade names, reservation system, and advertising that come with those agreements. Assessors often value hotel properties by capitalizing the net income which they can produce under competent management. But some of that income is produced by the hotel’s intangible assets. So, the valuation exercise and focus of this article is how best to account for and remove the value attributable to these intangible assets. Two opposing approaches have emergedâthe "Rushmore approach" and the "business enterprise approach." This article argues that the Rushmore approach is the better method. The title of this article borrows from Stephen Rushmore’s article, In Defense of the ‘Rushmore Approach’ for Valuing the Real Property Component of a Hotel ("Rushmore").3