Opinion ID: 1291283
Heading Depth: 3
Heading Rank: 3

Heading: Allocation Percentage Factor

Text: ¶ 48 Finally, WilTel challenges the Commission's use of a gross book value (cost) allocation percentage of 2.83% rather than a net book value (cost minus depreciation) of 1.9222%. The purpose of the allocation percentage is to determine Utah's taxable share of WilTel's system value. We need only determine which allocation basis most states use, since uniformity among states would foster fairness to each. WilTel hypothetically contrasts the present value of new and older assets with identical original costs in two different states and argues for net book value because assets depreciate. However, WilTel cites no specific data indicating that its assets are old in Utah and new elsewhere or the converse, and does not show, or even allege, that the majority of states employ net book value. To the contrary, according to the record testimony of Michael Goodwin, a multi-state certified appraiser, the Division's method, [gross book value] is used by most appraisers in most states. Expert testimony additionally cautioned that the use of net book value can give rise to negative numbers in some locations, making a rational allocation impossible. WilTel neither contests nor offers evidence against either of these statements. Instead WilTel argues, without supporting evidence, that use of gross book value is arbitrary and unconstitutional on the basis of the bald statement that it allocates more value to Utah than is Utah's fair share. WilTel has provided no basis for the use of net book value in the allocation calculation. Consequently, we affirm the Commission's use of gross book value in its allocation calculations. ¶ 49 In its final order, the Commission instructed the Division and WilTel to calculate the value of WilTel's taxable Utah property on the basis of equal weighting of time-adjusted cost and yield capitalization. The Commission ruled in favor of the Division's determination of value and set the system value of WilTel's property at $1,079,700,000. The Commission applied a Utah allocation percentage of 2.83%, yielding a Utah allocated value of $30,555,790. We find no error in the Commission's determination. ¶ 50 Affirmed. ¶ 51 Associate Chief Justice DURHAM, Justice ZIMMERMAN, Justice RUSSON, and Judge JACKSON concur in Chief Justice HOWE's opinion. ¶ 52 Having disqualified himself, Justice STEWART does not participate herein; Court of Appeals Judge NORMAN JACKSON sat.