1. (a) Pursuant to Arkansas Code § 26-26-1601 et seq., the property owned and/or controlled by a telephone company in Arkansas is to be assessed for ad valorem tax purposes by the Tax Division of the Arkansas Public Service Commission.

2. (b)

   1. (1) The division will value the taxable property actually used in the business of transmitting telephonic messages for hire, within, into, from, or through this state.
   2. (2) The value determined by the division shall include tangible and intangible property, it being the purpose to include in the valuation every element that adds value to the property.
   3. (3) Value shall be determined upon what a clear fee simple title to the utilities’ interest in the property would sell for under conditions that govern the sale of property of that character.
3. (c) The division will estimate the value of a telephone company’s property in accordance with the unit rule.

4. (d)

   1. (1) In appraising telephone company property, the division will use, if applicable, three (3) approaches to value:

      1. (A) Cost;
      2. (B) Stock and debt; and
      3. (C) Income capitalization.
   2. (2) The division may also consider other information as evidence of value that will enable it to determine the fair market value of the property of telephone companies.

5. (e)

   1. (1) In utilizing the approaches to value, comparables are required.
   2. (2) The standard for determining comparability is not perfect comparability, but rather reasonable similarity.
   3. (3) It is based upon as objective and comparable data as possible, but experience and judgment must be used in drawing conclusions from the data.
   4. (4) The comparables used should be sufficient in number as to be representative of that industry.

   5. (5) When determining comparability, the appraiser may analyze:

      1. (A) Industry classes;
      2. (B) Risk;
      3. (C) Growth;
      4. (D) Profitability;
      5. (E) Size and physical characteristics; and
      6. (F) Other characteristics.

Codification Notes: This section was promulgated as Section I of the Market Valuation Rules for Telephone Companies prior to codification into the Code of Arkansas Rules.