Court Opinion

ID: 6774475
Source: CourtListenerOpinion
Date Created: 2022-07-21 00:48:05.395944+00
Date Added: 2024-06-11T16:02:46.819820
License: Public Domain

Cook, J.,
dissenting. I would affirm the decision of the BTA upholding the assessment of the commissioner because the taxpayer has failed to show a clear right to relief. Belgrade Gardens v. Kosydar (1974), 38 Ohio St.2d 135, 67 O.O.2d 147, 311 N.E.2d 1.
This inventory “held for the purpose of being used, in whole or in part, in manufacturing” must be listed in a manufacturer’s personal property tax return. R.C. 5711.16. I agree with the BTA that the focus by the parties on the phrase “owned by such manufacturer” is misplaced. The transfer of ownership is inapposite to the reality that this assessed property is necessarily “held” to be used by the manufacturer to finish this complex automated system.
Even if ownership is the determinative issue, the taxpayer here has not demonstrated that a shift in ownership occurs concurrent with its receipt of progress payments (which the taxpayer identified as “advances” on its internal balance sheet). The purchase orders upon which the appellant and the majority rely are drafted by the various customers. Even those purchase orders that include terms as to ownership do not demonstrate the explicit agreement necessary to transfer title other than at the time of delivery. R.C. 1302.42(B). It seems unlikely that a customer would contract explicitly to acquire ownership of an incomplete complex manufacturing system in twenty-percent increments. Rather, the payments are, normally, just- equal installments prepaying the purchase price. The taxpayer conceded at oral argument that no use can be made of a partially completed system. I also question the conclusion by the majority that, prior to completion, these systems are “goods” that are “both existing and identified” and thus eligible for legal transfer, because neither party argued or briefed this point of law.
Moreover, there is no evidence offered by the taxpayer to relate the five installment payments to the cost of the inventory at the time such payments are made.
Other factors belying the taxpayer’s position are that possession remains with the taxpayer until the completed system is delivered; that the taxpayer, at its cost, maintains insurance on the entire automated system during its manufacture; and that warranties do not begin until the system is delivered to the customer.
I therefore respectfully dissent.