Opinion ID: 2604259
Heading Depth: 1
Heading Rank: 28

Heading: Calculating the Debt Values

Text: Of the two segments in the stock and debt approach to value, this one should be the easiest. UP reports what it owes at various times to several audiences, including the State of Oregon, the ICC, and its own shareholders. Nonetheless, differences appeared between the parties, due in part to a disagreement whether the Department had inadvertently double counted certain debt obligations for the 1983 tax year and in part due to a disagreement whether debt obligations should be valued on a yearly average or, like UPC's equity, on a final quarter average. Concerning the foregoing questions, the Tax Court held (1) that the Department had double counted and (2) that year-end values for debt obligations were best. We agree with both conclusions. The Department has not persuaded us that the Tax Court erred with respect to the double counting, and valuing the debt instruments in a manner consistent with the valuing of the corporate stock seems to us to be most consistent with the theory of ad valorem taxation previously discussed.