Hilliard City Schools Board of Education v. Franklin County Board of Revision
128 Ohio St. 3d 565
| Ohio | 2011Background
- Hotel property sale total price was $3,600,000, with realty and personal property part of a going-concern transfer.
- BOR allocated $800,000 to FF&E, $60,000 to inventory, and $500,000 to goodwill, yielding realty value of $2,240,000.
- BTA rejected goodwill and inventory allocations but kept FF&E at $800,000, valuing real estate at $2,750,000.
- Appellee sought to allocate the entire $3,600,000 to realty; cross-appellant sought to restore $500,000 goodwill; evidence included asset purchase agreement, inventory lists, and a December 2004 appraisal.
- Court held the FF&E deduction improper at $800,000 and reduced it to $280,000 based on the December 2004 appraisal; goodwill deduction was properly rejected.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the sale price should be allocated to realty only or to personal property as well. | Hilliard argues full sale price to realty. | K.D.M. contends some price should reflect FF&E and goodwill. | Allocation to FF&E reduced to $280,000; realty value adjusted accordingly. |
| Whether the $500,000 goodwill deduction is supportable. | K.D.M. asserts goodwill as a separate intangible acquired asset. | BOR/BTA rejected goodwill as a separate asset linked to realty. | Goodwill deduction affirmed as not supportable. |
| Whether reliance on the 2005 year-end financial statement to support FF&E value was proper. | BTA’s use of the 2005 year-end statement is appropriate. | Statement is unreliable and dated post-sale; not probative for allocation. | BTA’s FF&E allocation based on this statement is rejected; best evidence is the 2004 appraisal for FF&E at $280,000. |
| What is the correct FF&E value supporting the real estate valuation for tax year 2005? | Use the year-end financial statement to justify $800,000 FF&E. | Use appraisal figures and contemporaneous evidence; lower FF&E value. | FF&E value lowered to $280,000; realty valuation adjusted accordingly. |
Key Cases Cited
- FirstCal Indus. 2 Acquisitions, L.L.C. v. Franklin Cty. Bd. of Revision, 125 Ohio St.3d 485 (2010-Ohio-1921) (burden on owner to allocate sale price to non-realty assets where sale price is reported as realty)
- St. Bernard Self-Storage, L.L.C. v. Hamilton Cty. Bd. of Revision, 115 Ohio St.3d 365 (2007-Ohio-5249) (rejected goodwill deduction as a separate business value from realty)
- Am. Natl. Can Co. v. Tracy, 72 Ohio St.3d 150 (1995) (scope of appellate review: reasonable and lawful valuation decisions depend on reliable evidence)
- EOP-BP Tower, L.L.C. v. Cuyahoga Cty. Bd. of Revision, 106 Ohio St.3d 1 (2005-Ohio-3096) (definitive standard for reviewing BTA valuations)
- Cincinnati School Dist. Bd. of Edn. v. Hamilton Cty. Bd. of Revision, 127 Ohio St.3d 63 (2010-Ohio-4907) (illustrates reviewing court’s assessment of probative evidence in value determinations)