STATE OF FLORIDA
DIVISION OF ADMINISTRATIVE HEARINGS
LEON MOTOR LODGE, HOUSTON )
MOTOR LODGE, and TAYLOR )
MOTOR LODGE, )
)
Petitioners, )
)
vs. ) CASE NOS. 89-4628
) 89-4629
FLORIDA DEPARTMENT OF REVENUE, ) 89-4630
)
Respondent. )
)
RECOMMENDED ORDER
This matter came on for hearing in Tallahassee, Florida, before the Division of Administrative Hearings by its duly designated Hearing Officer, Diane Cleavinger, on the 10th day of January, 1991.
APPEARANCES
For Petitioners: Larry E. Levy, Esquire
MacFarlane, Ferguson, Allison & Kelly
P.O. Box 82
Tallahassee, Florida 32302
For Respondent: Jeffrey M. Dikman, Esquire
James F. McAuley, Esquire Assistant Attorneys General Department of Legal Affairs Tax Section, The Capitol
Tallahassee, Florida 32399-1050 STATEMENT OF THE ISSUES
The issues in this proceeding are as follows:
Whether during taxable years ending September, 1983 and 1984, the Petitioners together with David Shapiro & Company, Inc., constituted a "unitary business group" as defined in Section 220.03(1)(bb), Florida Statutes, (1983).
Whether the Petitioners' three factor method of apportionment was authorized by Section 214.71, Florida Statutes.
PRELIMINARY STATEMENT
On August 17, 1989, Petitioners, Leon Motor Lodge, Houston Motor Lodge, and Taylor Motor Lodge, filed a request for a formal administrative hearing. The Petitioners challenged certain tax assessments for tax years 1982, 1983 and 1984 issued by the Department of Revenue under Chapters 220 and 221, Florida
Statutes. Four issues were raised by the Petitioners' request for a formal hearing. Those issues were:
Whether during taxable years ending September, 1983 and 1984, the Petitioners together with David Shapiro & Company, Inc., constituted a "unitary business group" as defined in Section 220.03(1)(bb), Florida Statutes, (1983);
Whether the Petitioners' three factor method of apportionment was authorized by Section 214.71, Florida Statutes;
Whether interest on installment sales income should be excluded from the sales factor of the apportionment fraction in the three factor method of apportionment; and,
Whether Taylor Motor Lodge applied its net operating loss carry forward correctly for the calendar year 1982.
The Petitioners' request for a formal hearing was forwarded to the Division of Administrative Hearings and the cases were consolidated.
During the course of this formal administrative proceeding, but prior to the hearing, the Department reconsidered Petitioners' protest with regard to the issue of whether interest on installment sales income should be excluded from the sales factor of the apportionment fraction. The Department decided to accept the Petitioners' position on this issue and include the interest income in the apportionment fraction. This resulted in revision and reduction of the proposed assessment, with the effect of rendering this issue moot. Therefore, this issue will not be considered in this Recommended Order.
Later, during the course of the hearing, the Department also withdrew its assessment against Taylor Motor Lodge, involving the net operating loss carry forward for the calendar year 1982. Therefore, this issue is no longer before the Hearing Officer and is not addressed in this Recommended Order.
At the hearing, Petitioner called two witnesses and offered four exhibits into evidence. Respondent called one witness and offered the deposition testimony of David Shapiro, Victor Shapiro and Carl Shapiro. Respondent, also, offered twelve exhibits into evidence.
Petitioners and Respondent filed Proposed Recommended Orders on March 13, 1991 and March 7, 1991, respectively. The parties' proposed findings of fact have been considered and utilized in the preparation of this Recommended Order except where such proposals were not shown by the evidence or were cummulative, irrelevant, immaterial or subordinate. Specific rulings on the parties' Proposed Findings of Fact are contained in the Appendix to this Recommended Order.
FINDINGS OF FACT
Petitioners, Leon Motor Lodge, Houston Motor Lodge, and Taylor Motor Lodge, are three Georgia corporations operating motels located in Leon County, Florida, Taylor County, Florida and Escambia County, Florida, respectively. In 1982, 1983 and 1984, each hotel corporation held a franchise from Howard Johnsons. All three corporations were wholly owned by David Shapiro and Company, Inc.
David Shapiro and Company, Inc., is also a Georgia corporation with its principal office in Valdosta, Georgia. David Shapiro, Victor Shapiro and Carl Shapiro are officers and directors of the parent corporation, David Shapiro and Company, Inc., and are also officers and directors of each of the three subsidiary hotel corporations. David Shapiro and Company also engages in other business activities not related to the hotel corporations. All four corporations use the accounting services of Gerald Henderson, C.P.A.
Charles Hanlon, an employee of the Department, conducted an audit of David Shapiro and Company, Inc., and its wholly owned subsidiaries, Leon Motor Lodge, Houston Motor Lodge, and Taylor Motor Lodge. The audit concerned the taxable years ending September, 1982, 1983 and 1984. Mr. Hanlon's audit determinations did not treat Petitioners as a unitary business group.
Paul Craft, C.P.A., was Mr. Hanlon's audit supervisor. Mr. Craft reviewed Mr. Hanlon's audit workpapers and determined that Hanlon's audit improperly disallowed Petitioners the use of a federally reported deduction and overlooked the existence of a unitary business group.
After determining that Mr. Hanlon's original audit work was flawed, Mr. Craft made arrangements with the Petitioners' designated representative, Gerald Henderson, C.P.A., to personally redo Hanlon's field audit work. The field audit work was performed at Mr. Henderson's office in Valdosta, Georgia. Over a one week period, Mr. Craft reviewed the Petitioners' computer printouts of journals and ledgers as well as Petitioners' summary business records. Mr. Henderson was consulted for assistance in explaining the Petitioners' accounting controls, records organization, and in locating various records.
As a result of the audit, on April 18, 1986, the Department issued revised notices of intent to make audit changes, with supporting workpapers, and delivered the same to the Petitioners' representative, Gerald Henderson. Afterwards, Gerald Henderson and Paul Craft discussed the revised audit determinations and Mr. Craft explained the audit changes to Mr. Henderson.
The Department's revised notices of intent to make audit changes involved basically four audit determinations or issues. The audit determinations were:
a determination that the Petitioners had not properly used three factor apportionment;
a determination that David Shapiro and Company, Inc., Leon Motor Lodge, Inc., Taylor Motor Lodge, Inc. and Houston Motor Lodge, Inc. constituted a "unitary business group" for the taxable years ending 1983 and 1984;
a determination that interest earned on installment sales income should be excluded from the sales factor of the apportionment formula, and;
a determination that Taylor Motor Lodge could not carry-forward its net operating loss to the 1982 taxable year. 1/
The Department subsequently issued its notices of proposed assessment based upon these four revised audit changes. 2/ The Department's notices of proposed assessment were based on the revised audit work of Paul Craft and not on Ray Hanlon's original audit work. These notices of proposed assessment were timely mailed to the Petitioners.
The Petitioners protested the notices of proposed assessment. Upon review of the protest, the Department issued and timely mailed a Notice of Decision to the Petitioners which sustained the Department's position on all issues. The Petitioners' petition for reconsideration resulted in the timely issuance and mailing of a Notice of Reconsideration which again sustained the Department's position and rejected the Petitioners' protest position.
After the filing of the Petitioners' request for a formal administrative hearing, but prior to hearing, the Department revised the original proposed assessments. The revisions consisted of the following:
the inclusion of interest on installment sales income in the apportionment fraction; and,
the correction of a math error.
The revisions served to reduce the total sums originally assessed by approximately $18,000.00. No new tax liability was created by these "revisions". Revised notices of proposed assessments were prepared and timely mailed to Petitioners.
During taxable years ending 1982, 1983 and 1984, the Petitioners had payroll, property and sales in Florida. The payroll was attributable to employees involved in the operation of Leon Motor Lodge, Taylor Motor Lodge and Houston Motor Lodge. The sales consisted primarily of motel rents and receipts from the sale of food in the restaurants which adjoined the motels. Sales also included some installment sales income from the earlier sale of apartments and motels. The property factor consisted of the three motels and the restaurants associated with those motels. All such property was located in Florida.
During the tax years in question, multi-state corporations, such as the corporations involved in this case, were subject to an income tax based on the share of that taxpayer's adjusted federal income tax which was attributable to Florida. In order to determine the amount of a taxpayer's adjusted federal income tax attributable to Florida, the legislature established a statutory three factor apportionment method whereby a taxpayers' "adjusted federal income" is apportioned among the states by reference to a weighted formula consisting of payroll, property and sales factors. The "apportioned" share of a taxpayers' "adjusted federal income" is then taxed by Florida. A taxpayer must use the statutory three factor apportionment formula unless the taxpayer can establish that the statutory three factor apportionment formula "does not fairly represent" the degree of that taxpayer's economic activity in Florida and that whatever apportionment method the taxpayer used fairly represents that taxpayers degree of economic activity in Florida. See, Sections 220.13, 214.71, Florida Statutes (1983).
Petitioners used a three factor apportionment method similar to the statutory three factor apportionment method used by the Department. However, the Petitioners' method was not precisely the same method as the statutory three factor apportionment method used by the Department. The Petitioners' method, in fact, yielded a lower tax for Petitioners. No substantive evidence was submitted which demonstrated that Petitioners' departure from the statutory three-factor apportionment method was justified. Therefore, since the evidence demonstrated that Petitioners deviated from the statutory three factor apportionment method and since the evidence did not demonstrate any reason for not utilizing that statutory method, the Department's revised assessment on this issue should be sustained.
For taxable years ending 1983 and 1984, Florida had enacted Section 220.03(1)(bb), Florida Statutes (1983). That section established a special type of apportionment for businesses which constituted a "unitary business group." A "unitary business group" was defined as "a group of taxpayers related through common ownership whose business activities are integrated with, are dependent upon, or contribute to a flow of value among members of the group." Factors to be looked at in determining whether a group of taxpayers constituted a unitary business group included, but were not limited to, whether there was common purchasing of equipment, common accounting facilities, common legal representation, intercompany financing, joint efforts in expanding the business, shared officers and directors, submission of monthly financial statements, a uniform management theory, or an interchange of knowledge and expertise among the companies. See Rule 12C-1.51, Florida Administrative Code, and DR-Form F- 1061, "Instructions for Filing Under the Unitary Reporting Method". When, as in this case, a parent company owns or controls 50 percent or more of the outstanding voting stock of its subsidiaries, then the taxpayers have the burden to clearly establish that they are not a unitary business. Section 220.03(1)(bb), Florida Statutes.
In this case, there was common ownership among the subsidiaries in that during the pertinent taxable years ending 1983 and 1984, David Shapiro and Company, Inc., owned or controlled all of the issued and outstanding voting stock of Leon Motor Lodge, Inc., Houston Motor Lodge, Inc. and Taylor Motor Lodge, Inc. Additionally, the directors and officers of the parent corporation and the subsidiary corporations were the same individuals and these dual officers made the decisions regarding the selection of managers, and the employment and replacement of managers.
The hotel corporations did not maintain offices at the motel site for any of the officers or directors of the parent corporation or any of the officers of the individual hotel corporations. When these officers visited the motels, they would use whatever office or facilities were available.
Local managers were responsible for the day to day operations of that manager's hotel. The day to day operations included decisions on the hiring and firing of employees, the disciplining of employees, the salaries of employees, and the hours, duties and responsibilities of employees. The managers made all decisions with regard to the advertising and public relations for that manager's motel 3/ Each manager was authorized to write checks from the manager's account associated with that manager's hotel. Each manager wrote all checks paying for the normal operational expenses incurred by that manager's hotel. Disbursements which were typically made by the local managers included soap, toilet tissue, replacement linens, maid's uniforms, kleenex and other minor purchases such as the purchasing of one television, as well as, minor repairs to rooms if needed. Each hotel had a bookkeeper or auditor who kept the books and recorded the sales receipts and disbursements for the hotel. The evidence was not clear whether such purchases and decisions were made independently by the local manager of each hotel or whether such purchases above a certain amount of money required the local manager to confer with the officers or directors of David Shapiro and Company, Inc., in Valdosta.
Additionally, there was no substantial exchange of personnel between the hotel corporations. The parent corporation did not have a training program for its managers or employees. However, Howard Johnsons' did require that the managers attend a Howard Johnsons' management school to become acquainted with the requirements of Howard Johnsons' franchise agreements.
Finally, each of the hotel corporations was represented by local counsel in each of the cities where that corporation was located. However, it should be noted that the Petitioners were commonly represented at the hearing by Larry Levy. The evidence also established that the corporate minute books of Petitioners and of the parent company were commonly maintained by one law firm, Kilpatrick and Cody, in Atlanta Georgia. The cost of these common legal services was included in the management fee which David Shapiro and Company charged each of the Petitioners.
Considering all of the above factors, it would appear that, at least on the surface, each hotel corporation was a separate entity from its parent corporation and from its sister corporations. However three very important pieces of evidence substantially erode the reality of this surface independence.
First, all major decisions regarding the three hotel corporations were made by David Shapiro and Company, Inc. Specifically, these decisions were made by the principal officers of the Shapiro company, each of whom were members of the Shapiro family. In the words of Carl Shapiro, "all the major purchases, we did ourselves." For example, the decision to buy cash registers from NCR, rather than from another supplier, and the shopping of such a purchase was made by either Victor Shapiro or Carl Shapiro. Major purchases such as fifteen beds, television sets, air conditioners, or the decision to incur the expenses involved in refurbishing one of the hotels to conform to Howard Johnsons' standards 4/ were made by the officers of the Shapiro company and not by the local managers of the three hotel corporations. Major repairs and purchases such as was caused at the Leon Motor Lodge by severe flooding were also made by the officers of the parent corporation. 5/
One prime example of the control of the parent corporations over the hotel subsidiaries occurred when the hotel corporations purchased the restaurant associated with that hotel. Originally, the Petitioners only operated the motels. The restaurant at each motel was operated by Howard Johnsons.
However, prior to the period of the audit, Howard Johnsons, for business reasons, decided it would no longer operate the restaurants associated with its hotel franchises. While the purchase of the restaurants was not required by Howard Johnson's, the franchise owner/operators were forced to purchase and take over the operation of the restaurants in order to avoid having an empty and closed restaurant in front of the motels. David Shapiro and Company, Inc., believed that such closed restaurants in front of the motels would cause the operation of the motels to suffer drastically. Therefore, the Shapiros' decided that each hotel corporation would purchase and assume operation of that motel's adjoining restaurant.
After the restaurants were acquired and operation commenced the restaurants were at all times managed by a manager who was a different person from the manager of the motel. Each restaurant manager had authority and control over that restaurant's operation similar to the managers of each hotel. Likewise, separate bank accounts and separate books of receipts and expenditures were maintained for each restaurant.
Second, the bank accounts of each motel in each city consisted of (1) the manager's account which was sometimes referred to as a petty cash account;
(2) the main account which was the account into which receipts from sales and rental of rooms were deposited on a daily basis; and (3) the bank credit card account which received credit card deposits. As indicated earlier, the managers of each subsidiary motel only had the ability to sign checks on a separate
subsidiary account which was referred to as a petty cash account or managers account. The normal operational expenses incurred by the motel were written by the managers out of these manager's accounts. Funds in the manager's accounts varied and could range from $7,500.00 to as high as $12,000.00 or $15,000.00.
Importantly, the manager's account for each hotel would be reimbursed from the hotel's main account on a regular basis. The checkbook for each hotel's main account, was maintained at the offices of David Shapiro and Company, Inc. in Valdosta, Georgia. The managers lacked any authority to write checks upon these accounts. The managers would ordinarily exhaust all funds in that manager's account in one week to ten days. Therefore, replenishment of the funds in a manager's account occurred every week to ten days. The manager's accounts required replenishment because deposits from sales and rentals were made daily into the main accounts. All of the main accounts were controlled in Valdosta by David Shapiro and Company.
Daily, each manager or bookkeeper submitted a list of receipts and disbursements together with statements of purchases to Jerri Tomlinson, the office manager for Shapiro and Company, Inc. Ms. Tomlinson would mathematically verify the information she received from the hotels and computer code these records. These accounting reports and ledgers were then compiled by David Shapiro and Company's C.P.A. into computer printouts. These printouts were then delivered to Shapiro and Company, in Valdosta Georgia, which retained the data compilations for its records. Gerald Henderson's firm not only compiled the data described above, but it also functioned as the auditor for the parent and its subsidiary corporations.
By this uniform system of management and integrated accounting controls, David Shapiro and Company, Inc. not only had access to vital management information, but also exercised the ability to control the level or amount of cash in each manager's petty cash account. In addition to the daily data it received, David Shapiro and Company, Inc., regularly reviewed a weekly report submitted by each hotel's manager and then determined how much money to transfer into that manager's account from the main account and whether the amount requested by management was "warranted."
There is no question that by maintaining main accounts at the parent level, David Shapiro and Company, Inc. was able to directly control the expenditures of each hotel. That is, the main accounts were not only used to replenish the managers' operating accounts, but also, to directly control that manager's ability to make purchases for the hotel.
Third, the parent corporation and its subsidiaries engaged in financially helping each other out when one corporation's sales were not sufficient to meet its overhead. This intercompany financing took the form of loans between and among the parent corporation and the subsidiary corporations. All the loans were interest bearing loans and met Federal IRS requirements. All of these loans were made at below market rate. An example of this intercompany financing occurred during the audit period. Leon Motor Lodge was losing money, and Taylor and Houston Motor Lodges were making money. There were several loans back and forth between the subsidiary companies. In referencing these loans, Carl Shapiro stated in his deposition that "there was a lot of them, and there were some big ones. I guess ten or fifteen or twenty thousand sometimes. It could amount to that much." This intercompany financing creates a material "flow of value" between and among the parent corporation and the subsidiary companies and demonstrates the unitary nature of Petitioners' businesses.
Additionally, all three of the facts mentioned above, demonstrate that Petitioners applied a routine management theory to the hotel corporations in that routine day to day decisions were delegated to subsidiary managers but ultimate control over the family business was retained at the David Shapiro and Company level. This uniform management was accomplished through family control over main accounts, control over major purchasing or expansion decisions, control over the hiring and firing of local on site managers, and the level of funds to be entrusted to any given manager.
Likewise, the shared officers of the subsidiary companies resulted in an interchange of knowledge and expertise among the corporations since the experiences learned by the Shapiro family in managing one hotel could be directly applied to the operations of the other corporations.
Finally because of the Shapiro's uniform management and integrated accounting controls, significant economies of scale resulted. To begin with, the companies had the ability to make intercompany loans at below market rates. In addition, by maintaining the bank accounts of each hotel at the same bank, the companies enjoyed an economy of scale which resulted in discounts on banking service charges in excess of the discounts available to any of the subsidiaries individually. Similar economies of scale resulted in discounts to Petitioners on insurance rates.
These discounts create a "flow of value" resulting from the unitary operations or pooling of resources by Petitioners. Clearly when all the facts are considered, Petitioners constituted a unitary business group as defined in Section 220.03(1)(bb), Florida Statutes. Therefore, the Department's revised assessments on this issue should be sustained.
CONCLUSIONS OF LAW
The Division of Administrative Hearings has jurisdiction over the parties to, and the subject matter of this proceeding. Section 120.57(1), Florida Statutes.
The Department's burden of proof is limited, under Section 120.575(2), Florida Statutes (1989), to establishing the underlying factual and legal basis for its proposed assessments. Since the Department's assessments are entitled to a presumption of correctness, the burden then shifts to Petitioners to demonstrate that the Department's assessments are invalid. Section 214.06, Florida Statutes (1989).
For the taxable years ending 1982-1984, Petitioners' business income must be apportioned using the three factor formula created by Section 214.71, Florida Statutes (1983). Section 214.71, Florida Statutes, states in pertinent part:
Except as otherwise provided in ss. and
214.73, the base upon which any tax made applicable to this chapter shall be apportioned shall be determined by multiplying same by a fraction the numerator of which is the sum of the property factor, the payroll factor, and the sales factor and the denominator of which is 3. . . .
It is not in dispute that Petitioners must apportion their income using the property, sales and payroll factors. In this case, however, Petitioners did not use the three factor apportionment formula required by Section 214.71, Florida Statutes.
Section 214.71's statutory method of apportionment must be used unless some other method was authorized under the special relief provisions of Section 214.73, Florida Statutes (1983). Section 214.73, Florida Statutes, states:
If the apportionment methods of ss. 214.71
. . . do not fairly represent the extent of the taxpayers tax base attributable to this state, the taxpayer may petition for or the department may require, in respect to all or any part of the taxpayer's tax base, if reasonable;
Separate Accounting;
The exclusion of any one or more factors;
The inclusion of one or more additional factors which will fairly represent the taxpayer's tax base attributable to this state; or
The employment of any other method which will produce an equitable apportionment.
"There is a very strong presumption in favor of normal three factor apportionment and against the applicability of the relief provisions." Roger Dean Enterprises v. State, etc., 387 So.2d 358, 363 (Fla. 1980). Therefore, in order to use the special relief provisions of Section 214.73, Florida Statutes, Petitioners are required to demonstrate that the normal three factor apportionment method established in Section 214.71, Florida Statutes, "does not fairly represent" the degree of the Petitioners' activity within Florida. The Petitioners are also required to demonstrate that the method which they in fact used fairly represents their degree of economic activity within the state of Florida. See, Section 214.73, Florida Statutes (1983) and Roger Dean, supra. Petitioners have failed to meet this burden of proof. Since Petitioners did not demonstrate that they were entitled to deviate from the statutorily prescribed method of three factor apportionment, they are required to apportion under the Department's method. Therefore, the Department's assessment is correct.
During two of the three taxable years in question (the taxable years ending 1983 and 1984), a combined method of three factor apportionment known as the "unitary reporting method" applied to members of a "unitary business group." See, Section 220.03(1), Florida Statutes (1983); Rule 12C-1.51, Florida Administrative Code, and DR-Form F-1061. "Instructions for Filing Under the Unitary Reporting Method". Section 220.03(1), Florida Statutes, reads:
(bb) "Unitary business group" means a group of taxpayers related through common ownership whose business activities are integrated with, are dependent upon, or contribute to a flow of value among members of the group. When direct or indirect ownership or control is 50 percent or more of the outstanding voting stock, the group shall be considered to e a unitary busi- ness group unless clearly shown by the facts and circumstances of the individual case to be
a nonunitary business group. When direct or indirect ownership or control is less than 50 percent of the outstanding voting stock, all elements of the business activities shall be considered in determining whether the group qualifies as a unitary business group.
DR-Form F-1061, has been promulgated as a rule by Florida Administrative Code Rule 12C-1.51 (1983). Form F-1061 summarizes early United States Supreme Court precedent leading up to the adoption of the unitary reporting method, by the Florida legislature.
Form F-1061 quotes and adopts the statutory definition of a "unitary business group," which is contained within Section 220.03(1)(bb), Florida Statutes (1983). That section defines "unitary business group" as "a group of taxpayers related through common ownership whose business activities are integrated with, are dependent upon, or contribute to a flow of value among members of the group." (e.s.)
The definition of a "unitary business group" also contains a statutory presumption which is applicable in this action. Where, as in the instant case, a parent company owns or controls, directly or indirectly, 50 percent or more of the outstanding voting of several subsidiaries, "the group shall be considered to be a unitary business group unless clearly shown by the facts and circumstances of the individual case to be a nonunitary business group." (e.s.) See, Section 220.03(1)(bb), Florida Statutes (1983).
The effect of the above-quoted presumption is to place the burden of proof on the Petitioners to "clearly show" that they were not members of a unitary business group during the years in question. That is, Petitioners had to show that the motel and restaurant activities were not integrated in their operations, were not interdependent and that there was no significant flow of value among the members of the group.
The Department's "Instructions for filing under the unitary reporting method," Form F-1061, pages 4-5 provides a nonexclusive checklist of the types of factors to be considered in determining whether a group of corporations is a "unitary business group." Those factors include whether there is common purchasing of equipment, common accounting facilities, common legal representation, intercompany financing, joint efforts in expanding the business, shared officers and directors, submission of monthly financial statements, a uniform management theory, or interchange of knowledge and expertise among the companies.
The Department's list of factors, as promulgated in form F-1061, is merely demonstrative of the types of factors which may demonstrate an integration of operations, interdependency or a flow of value. None of the listed factors are an absolute precondition for finding a unitary relationship among related entities. Nor does the existence of any one or more of the factors conclusively establish that a unitary relationship exists.
Where, as here, Petitioners were wholly owned subsidiaries, engaged in the same line of business (motel and restaurant), and where a flow of value existed among the subsidiaries, together with an integration of upper management decision making and an integration of accounting operations, the Petitioners have failed to clearly rebut the statutory presumption that they are engaged in a unitary business. Therefore, the Department's assessment is sustained.
Based on the foregoing Findings of Fact and Conclusions of Law, it is accordingly recommended that the Department of Revenue enter a Final Order sustaining the Department's revised assessments against Leon Motor Lodge, Inc., Taylor Motor Lodge, Inc., and Houston Motor Lodge, Inc., with the exception of the corporate income tax assessment against Taylor Motor Lodge, for the taxable year ending 1982, which has already been withdrawn.
RECOMMENDED this 31st day of May, 1991, in Tallahassee, Florida.
DIANE CLEAVINGER
Hearing Officer
Division of Administrative Hearings The DeSoto Building
1230 Apalachee Parkway
Tallahassee, FL 32399-1550
(904) 488-9675
Filed with the Clerk of the Division of Administrative Hearings this 31st day of May, 1991.
ENDNOTES
1/ As mentioned earlier issues c and d were withdrawn and are not a part of this Recommended Order.
2/ The Department had obtained extension agreements from the Petitioners' designated representative for the purpose of extending the limitations period for the 1982 taxable year.
3/ In only one instance did a manager discuss with one of the Shapiros the use of an advertising medium, i.e., billboards. The discussion occurred because the advertising billboards were owned by a person in Valdosta, Georgia.
4/ Refurbishing generally was required to be made pursuant to the franchise agreement in intervals which were generally about five years apart.
5/ The flooding at the Leon Motor Lodge necessitated the acquisition of a substantial loan around $100,000.00. The loan was negotiated by one of the Shapiro brothers in the name of Leon Motor Lodge. The parent corporation did not co-sign or endorse any of the loan documents required by the local bank.
APPENDIX TO RECOMMENDED ORDER, CASE NO. 89-4628
1. The facts contained in paragraphs 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 12, 18, 19, 20, 29 and 30 of Respondent's Proposed Findings of Fact are adopted in substance insofar as material.
The facts contained in the first sentence of paragraph 21 of Respondent's Proposed Findings of Fact are adopted. The remainder of the paragraph is subordinate.
The facts contained in paragraph 31 of Respondent's Proposed Findings of Fact are adopted, except for the 3rd sentence of the first paragraph and the fourth and fifth paragraph which were not shown by the evidence.
4. The facts contained in paragraph 11, 13, 14, 15, 16, 17, 23, 24, 25, 26, 27 and 28 of Respondent's Proposed Findings of Fact are subordinate.
The facts contained in the first two paragraphs of finding 1 of Petitioner's Proposed Findings of Fact are adopted, except the facts contained in the last two paragraphs which were not shown by the evidence.
The facts contained in paragraph 2 of Petitioner's Proposed Findings of Fact are adopted except for the facts relating to restrictions on the managers which were not shown by the evidence.
The facts contained in paragraph 3 of Petitioner's Proposed Findings of Fact are adopted in substance, insofar as material.
The facts contained in paragraphs 4 and 5 of Petitioner's Proposed Finding of Fact were not shown by the evidence.
COPIES FURNISHED:
Larry E. Levy, Esq.
MacFarlane, Ferguson, Allison & Kelly
P.O. Box 82 Tallahassee, FL 32302
Attorney for Petitioners
Jeffrey M. Dikman, Esq. James F. McAuley, Esq. Assistant Attorneys General Department of Legal Affairs The Capitol-Tax Section Tallahassee, FL 32399-1050
Victoria L. Weber General Counsel Department of Revenue
Carlton Building, Room 204 Tallahassee, FL 32301
J. Thomas Herndon Executive Director
104 Carlton Building Tallahassee, Florida 32399-0100
NOTICE OF RIGHT TO SUBMIT EXCEPTIONS:
ALL PARTIES HAVE THE RIGHT TO SUBMIT WRITTEN EXCEPTIONS TO THIS RECOMMENDED ORDER. ALL AGENCIES ALLOW EACH PARTY AT LEAST 10 DAYS IN WHICH TO SUBMIT WRITTEN EXCEPTIONS. SOME AGENCIES ALLOW A LARGER PERIOD WITHIN WHICH TO SUBMIT WRITTEN EXCEPTIONS. YOU SHOULD CONTACT THE AGENCY THAT WILL ISSUE THE FINAL ORDER IN THIS CASE CONCERNING AGENCY RULES ON THE DEADLINE FOR FILING EXCEPTIONS TO THIS RECOMMENDED ORDER. ANY EXCEPTIONS TO THIS RECOMMENDED ORDER SHOULD BE FILED WITH THE AGENCY THAT WILL ISSUE THE FINAL ORDER IN THIS CASE.
| Issue Date | Proceedings |
|---|---|
| May 31, 1991 | Recommended Order (hearing held , 2013). CASE CLOSED. |
| Issue Date | Document | Summary |
|---|---|---|
| Jul. 16, 1991 | Agency Final Order | |
| May 31, 1991 | Recommended Order | Corporate tax-unitary business group; method of apportionment; three factor apportionment; burden of proof on taxpayer. |
