STATE OF FLORIDA

DIVISION OF ADMINISTRATIVE HEARINGS

METROCARE, INC. et al. )

)

Petitioner, )

)

vs. ) CASE NO. 76-1992

) FLORIDA DEPARTMENT OF REVENUE, )

)

Respondent. )

)

RECOMMENDED ORDER

Pursuant to notice, the Division of Administrative Hearings, by its duly designated Hearing Officer, K. N. Ayers, held a public hearing in the above styled case on July 21, 1977 at Tampa, Florida.

APPEARANCES

For Petitioner: Howard P. Ross, Esquire

Post Offoce Box 12078

St. Petersburg, Florida 33733

For Respondent: E. Wilson Crump, II, Esquire

Assistant Attorney General The Capitol

Tallahassee, Florida 32304 RECOMMENDED ORDER

By Petition received the by the Department of Revenue on November 4, 1976, Metrocare, Inc. and subsidiaries, Petitioner, seeks to have set aside the disallowance of $1,359,717 deduction claimed in its return filed for fiscal year ending 1/31/75.

Petitioner contends that the deductions, which were disallowed by Respondent, represent appreciation in value of property between date of purchase and November 2, 1971; and that this appreciation in value is not subject to tax as no income tax was constitutionally permitted prior to November 2, 1971. No factual dispute is here involved.

The hearing in this case was previously continued at the request of both parties on the grounds that the issues involved are the same as those involved in Department of Revenue vs. Leadership Housing, Inc. which was on appeal to the Florida Supreme Court. At this hearing Petitioner moved for further continuance on the grounds that the Leadership Housing case, which on March 3, 1977 was decided adversely to Petitioner's position by the Florida Supreme Court, was now on Petition for Certiorari to the U.S. Supreme Court and that this hearing should be held in abeyance pending final determination of the legal issue regarding the income tax owed on property which appreciated in value between the

time it was purchased and November 2, 1971. When this motion was denied, neither Petitioner nor Respondent presented any evidence.

FINDINGS OF FACT

1. The only facts that were here presented are those contained in the petition which were admitted in the Answer by Respondent. The sole issue here presented is the effect of the appreciation in the value of property between time of acquisition and November 2, 1971 when such property is sold subsequent to January 1, 1972 and a capital gain is realized thereon.

   
   

   CONCLUSIONS OF LAW

   
   

2. The issue here involved is identical with that decided in Department of Revenue v. Leadership Housing, Inc., et al., 343 So.2d 611 (Fla. 1977), viz. whether or not appreciation in value of a capital asset is income prior to such time as it is realized from a sale, exchange or other disposition of the asset. The Florida Supreme Court held that no appreciation in value of a capital asset was income until such time as it was realized.

   
   

3. Accordingly the capital gain on the sale subsequent to January 1, 1972 of a capital asset is income, for Florida Corporate Income Tax purposes, in the year the asset is sold without any diminition for appreciation in value occurring prior to November 2, 1971. It is therefore,

RECOMMENDED that the petition be denied.

DONE AND ENTERED this 26th day of July, 1977, in Tallahassee, Florida.

K. N. AYERS Hearing Officer

Division of Administrative Hearings Room 101, Collins Building

530 Carlton Building Tallahassee, Florida 32301 (904) 488-9675

COPIES FURNISHED:

Howard P. Ross, Esquire

P.O. Box 12078

St. Petersburg, Florida 33733

E. Wilson Crump, II, Esquire Assistant Attorney General The Capitol

Tallahassee, Florida 32304

Docket for Case No: 76-001992

Orders for Case No: 76-001992