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ASSESSORS' HANDBOOKSECTION 504ASSESSMENT OFPERSONAL PROPERTY AND FIXTURESOCTOBER 2002REPRINTED JANUARY 2015CALIFORNIA STATE BOARD OF EQUALIZATIONSEN. GEORGE RUNNER (RET.), LANCASTERFIONA MA, CPA, SAN FRANCISCOJEROME E. HORTON, LOS ANGELES COUNTYDIANE L. HARKEY, ORANGE COUNTYBETTY T. YEE, SACRAMENTOCYNTHIA BRIDGES, EXECUTIVE DIRECTORFIRST DISTRICTSECOND DISTRICTTHIRD DISTRICTFOURTH DISTRICTSTATE CONTROLLER
FOREWORDAssessors' Handbook Section 504 (AH 504), Assessment of Personal Property and Fixtures, is acomplete rewrite and compilation of three original manuals no longer in circulation: Assessors'Handbook Section 571 (AH 571), Appraisal of Equipment, Inventory, and Supplies, Section 221(AH 221), Tax Situs of Property, and Section 572 (AH 572), General Audit Guidelines. AH 504includes some text from the original manuals and material concerning subjects not previouslycovered in the three prior handbook sections.This manual is a complete reorganization of topics. The rewrite was undertaken by staffmembers of the Assessment Policy and Standards Division (APSD) in conjunction with the staffof the Property Taxes Section of the Legal Department of the State Board of Equalization and isthe product of staff writing at the direction of the Board.The objective of this manual is to give property tax appraisers, auditor-appraisers, and otherinterested parties an understanding of issues concerning personal property and fixtures forassessment purposes. The manual builds on the basic knowledge of generally acceptedaccounting principles and appraisal concepts. It should serve as a guide for the appraisal andassessment of personal property and fixtures.If there is an inconsistency resulting from the absence of technical data in this manual and amore advanced, specific manual is available, the more specific manual controls. Moreover, inthe interest of accuracy and thoroughness, appraisers, auditor-appraisers, and other interestedparties are advised to consult with qualified experts and other authoritative sources regarding thetechnical aspects of valuing any complex property.As part of the process of producing this manual, meetings were held with assessors, industryrepresentatives, and other interested parties. Conflicts regarding the content of the manual wereidentified, and most were resolved. Those issues not resolved were voted on by Members of theBoard of Equalization after hearing testimony from interested parties and Board staff. Theresults of the voting are reflected as Board positions on issues in the manual. The Boardoriginally approved this manual on December 10, 1998 and the Board approved an update onJune 15, 2000.This second update of the manual was approved by the Board onOctober 3, 2002.Under Government Code sections 15606 et seq., the Board is charged with the duty ofadministratively enforcing and interpreting the statutes governing the local assessment function.AH 504iOctober 2002
While regulations adopted by the State Board of Equalization are binding as law, Board-adoptedmanuals are advisory only. Nevertheless, courts have held that they may be properly consideredas evidence in the adjudicatory process.1 The citations and law references in this publicationwere current as of the writing of the manual.David J. GauDeputy DirectorProperty and Special Taxes Department1Coca-Cola Co. v. State Board of Equalization (1945) 25 Cal.2d 918; Prudential Ins. Co. v. City and County ofSan Francisco (1987) 191 Cal.App.3d 1142; Hunt Wesson Foods, Inc. v. County of Alameda (1974) 41 Cal.App.3d163.AH 504iiOctober 2002
TABLE OF CONTENTSCHAPTER 1: INTRODUCTION. 1WHAT IS TAXABLE . 1WHAT IS TAXABLE PERSONAL PROPERTY . 1GENERAL OVERVIEW OF THE SEVEN FACTORS OF AN ASSESSMENT . 3Assessability of Property. 3Taxable Property v. Exempt Property. 3Statute of Limitations. 4Lien Date. 4Assessee of Property. 5Owner, One Who is in Possession or Control. 5Joint Assessees. 6Unknown Owner. 7Situs of Property. 7Description of Property. 7Classification of Property . 7Security of Property . 8Secured Property Defined . 8Unsecured Property Defined. 8Securing Personal Property. 8Value of Property . 9CHAPTER 2: CLASSIFICATION . 11IMPORTANCE OF CLASSIFICATION . 11GENERAL CLASSIFICATION TYPES AS REQUIRED BY LAW. 11Land. 12Improvements . 12Personal Property . 12CLASSIFICATION FOR VALUATION PURPOSES . 12Improvements (Structure v. Fixture) . 13Structure Item. 13Fixture. 13Three Tests for Determining Whether an Article is a Fixture . 13Importance of Classification as Structure versus Fixture . 17Classification Guidelines . 17Special Classification Issues . 18Classification of ATM's. 18Classification of Telephone Systems. 18Classification of Service Station Improvements. 19Classification of Partitions. 19Classification of Liquefied Petroleum Gas Tanks . 20Classification of Wind Machines . 20Tangible Personal Property (General Categories). 20Equipment. 21Supplies. 21Business Inventory Exemption . 21Questions and Answers Regarding Classification of Supplies Versus Inventory . 22Vehicles, Vessels, Aircraft, and Manufactured Homes . 28Vehicles . 28AH 504iiiOctober 2002
Vessels, Aircraft, and Manufactured Homes . 29CHAPTER 3: SITUS OF PERSONAL PROPERTY . 30WHAT IS TAX SITUS: PERMANENT VERSUS TEMPORARY SITUS . 30DETERMINING SITUS OF MOVABLE PROPERTY . 31General Situs Rules (Rule 205) . 31Over Six Months Prior to the Lien Date . 31Less Than Six Months Prior to the Lien Date. 32Movable Property In-Transit. 32Situs Other Than at Location . 32Habitual Presence or Substantial Average Rule . 32Habitual Situs at More Than One Location in California. 33Habitual Situs Both in California and in Another State or Nation . 33Example: Situs of Movable Property . 35Situs of Leased or Rented Property (Rule 204). 36Single Assessment for Leased Personal Property . 36Situs of Property In-Transit (Rule 203). 37Property Moving in Interstate or Foreign Commerce . 37Commencement of Transit . 37Termination of Transit. 37Interruption of Transit . 38Property Moving in Intrastate Commerce. 38Situs of Property Being Transported by an Owner. 38Situs of Property Being Transported to a Buyer. 38Interruption of Transportation . 39OTHER SPECIAL SITUS SITUATIONS. 39Aircraft . 39Definitions . 39General Aircraft. 39Certificated Aircraft. 39Air Taxi . 39Situs of Aircraft .
15.06.2000 · Assessors' Handbook Section 504 (AH 504), Assessment of Personal Property and Fixtures, is a complete rewrite and compilation of three original manuals no
