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Tennessee Upholds Tax Exemption for Intangible Costs

by Malinda Gillilan, Atlanta, April 2012

A Tennessee Administrative Judge has ruled that intangible costs such as freight, installation and engineering incurred by a manufacturer to put equipment and machinery into service should not be included as part of property's value for tax assessment.


In Signal Mountain Cement Company v. Hamilton County, Judge Mark J. Minsky said the assessor erred by adopting federal capitalization principles to value tangible personal property. The assessor's valuations were based on the company's depreciation schedules from its federal income tax returns.


Taxpayers should review their personal property schedules to determine whether they have been similarly over assessed. As Judge Minsky explained, "Tangible personal property must be valued separately from any intangible costs to ship, configure or install it."