Ohio Department of Taxation Personal Property Tax

County Bulletin

TO: ALL COUNTY AUDITORS - Bulletin No. 198

November 16. 1964

FROM: Louis J. Schneider. Jr. Tax Commissioner

RE: Computing True Value of Furniture, Fixtures and Equipment of Hotels and Motels

Bulletin No. 124. issued April 8. 1958, Is hereby amended to substitute a valuation method for furniture, fixtures and equipment of hotels and motels. The exhaustion method continues in effect for the valuation of furniture, fixtures and equipment of retail and other establishment where book records are maintained on this method or where book records do not include all such items still on hand and in use or held for use.

Assuming that hotels and motels begin business with a fixed floor area completely furnished, later acquisitions are primarily replacements. If complete and accurate figures are not available, replacement allowance can be computed and substituted for disposal values in the 302 True Value Computation, by the application of standard equipment cost indexes. A replacement allowance percentage, obtained by dividing the former year cost index by the current year cost index, is applied to the cost of the current acquisition to determine the replacement allowance for the property replaced. For example. If a $5, 000 furniture purchase replaces twelve-year-old furniture, and the cost index of twelve years ago is 79% of the cost Index of the current year, the replacement allowance to 79% of $5,000 or $3, 950. Each year's acquisitions are considered as replacements of oldest items not yet offset by prior replacement allowances. By converting the cost of the new items into equivalent costs of the past years, through the cost-index percentage. disposals of old items are credited at the computed replacement allowances. This method to the reverse of the common appraisal practice of computing present replacement costs of property.

The following sample computations and cost Indexes for hotel and motel equipment for the years 1925 through 1963 and the first half of 1964 illustrate the method to be used.

COST INDEXES FOR HOTELS AND MOTELS

Year	Cost Index	Year	Cost Index	Year	Cost Index	Year	Cost Index
1964*	220.3	1954	174.9	1944	102.7	1934	72.9
1963	219.5	1953	174.2	1943	100.8	1933	71.5
1962	217.1	1952	172.8	1942	100.1	1932	68.5
1961	215.4	1951	173.5	1941	93.6	1931	72.8
1960	214.3	1950	160.9	1940	88.8	1930	83.3
1959	212.7	1949	153.6	1939	85.2	1929	89.1
1958	210.9	1948	160.5	1938	82.8	1928	94.8
1957	206.7	1947	148.6	1937	85.2	1927	95.3
1956	195.8	1946	120.6	1936	81.2	1926	100.0
1955	181.5	1945	103.8	1935	77.7	1925	107.8

                                         

*Six Month Index - 1964

APPLICATION

What was the cost of furniture acquired in 1951 which was replaced in 1963 at a cost of $5, 000 ?

1951 cost index          173. 5 = 79%

1963 cost index           219.5

                                  79% of $5, 000 (1963 cost) = $3,950 as 1951 cost

TRUE VALUE COMPUTATION

December 31, 1963

Year of Acquisition	Acquisition Cost	Replacement Allowance	Remaining Cost	True Value Pct.        Amount
1951	250,000	3,950	246,050	20	49,210
1963	5,000		5,000		95
	4,750
	255,000	3,950	251,050		53,960

DEPARTMENT OF TAXATION

      INTER-OFFICE COMMUNICATION

TO :      ALL DISTRICT MANAGERS

DATE:  February 6, 1978

FROM: Thomas R. Nourse, Admin. Asst., Property Tax Division

RE:      County Auditor Bulletin No. 198

ATTN:   Property Tax Supervisors

The following is a summary and update of all the cost indexes established since the issuance of the bulletin, November 16,1964.

                                                 Year                                    Cost Index

1964	220.4
1965	222.3
1966	227.6
1967	238.4
1968	248.4
1969	260.2
1970	275.1
1971	287.6
1972	295.0
1973	307.6
1974	346.6
1975	381.2
1976	403.4
1977	423.7

TRN/pj

cc: Jim Witzel

Wil Margeson

Chuck Green

Ed Heinke Jr.

Bob Dudgeon

Jack Cook

Chris Whitaker