1. (a) After the correlated value has been computed, an adjustment will be made for the value of leased property.

2. (b) Criteria for the valuing of leased property to be included in this adjustment are as follows:

   1. (1) The categories of leased property are limited to real estate, transportation, and equipment used in the transmission of telephonic messages;
   2. (2) No lease is to be reported if capitalized and included in the cost approach;
   3. (3) The state allocation of total system leased property to be included in the valuation shall be the leased property located in Arkansas;

   4. (4)

      1. (A) All the aforementioned leased property will be reported to the Tax Division of the Arkansas Public Service Commission.
      2. (B) The companies shall specify when reporting their leased real property if the terms of the lease require the taxes to be paid by the lessor.
      3. (C) If, under terms of the lease, the lessor is required to pay the taxes, the leased property will not be assessed by the division.
      4. (D) All other leased property will be assessed by the division; and

   5. (5)

      1. (A) The companies shall include in their division reports the market value of the property as determined by the county assessor of the county in which the property is located, if it has been assessed locally.
      2. (B) Their estimate of market value will be used by the division to value the property.
      3. (C) If this information is not available, the value will be determined on a depreciated book basis.

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