Evansville Courier Company Inc. v. Vanderburgh County Assessor ( 2017 )

FILED
Jun 05 2017, 2:43 pm
CLERK
Indiana Supreme Court
Court of Appeals
and Tax Court
ATTORNEYS FOR PETITIONER ATTORNEYS FOR RESPONDENT
Joshua C. Neal Curtis T. Hill, Jr.
William A. Ramsey Attorney General of Indiana
Barrett McNagny LLP Winston Lin
Fort Wayne, Indiana Jessica R. Gastineau
Deputy Attorneys General
Indianapolis, Indiana
IN THE
INDIANA TAX COURT
Evansville Courier June 5, 2017
Company Inc., Tax Court Case No.
Petitioner, 02T10-1611-TA-55
On Appeal from a Final
v. Determination of The Indiana
Board of Tax Review
Vanderburgh County Assessor,
Respondent
Baker, Special Judge.
Indiana Tax Court | Opinion 02T10-1611-TA-55 | June 5, 2017 Page 1 of 20
[1] Evansville Courier Company, Inc. (Evansville Courier), seeks judicial review of
the decision of the Indiana Board of Tax Review (the Board) denying
Evansville Courier’s claimed tax deductions for the abnormal obsolescence of a
printing press and related equipment. The Court finds that the Board
improperly admitted an untimely-disclosed exhibit offered by the Vanderburgh
County Assessor (the County) and that the Board did not err by finding that
Evansville Courier did not make a prima facie case of abnormal obsolescence.
We find that the Board erred by admitting the untimely exhibit. We also find,
however, that the Board did not err by denying Evansville Courier’s petition,
and affirm the Board’s judgment.
Facts 1
[2] Evansville Courier is a daily newspaper publisher located in Evansville. Its
primary paper, the Evansville Courier & Press, is published seven days per week.
Over the last decade or so, Evansville Courier has experienced the downturn of
the newspaper industry. In 2004, it employed approximately 500 people;
currently, it employs approximately 215 people. In 2011, on average, it sold
49,126 newspapers from Monday through Saturday, with an average Sunday
circulation of 70,864 newspapers. By 2014, the average circulation decreased to
39,999 newspapers during the week and to 57,111 on Sundays. It has
1
The Court held oral argument in this case in Fort Wayne on May 31, 2017. We thank Judge Surbeck and
his staff for their warm hospitality, and we thank counsel for both parties for their excellent written and oral
presentations.
Indiana Tax Court | Opinion 02T10-1611-TA-55 | June 5, 2017 Page 2 of 20
experienced an overall decline of nearly 60% in circulation since the 1990s.
Evansville Courier anticipates that it will soon reduce the number of publication
days for the Evansville Courier & Press and that at some point in the next ten
years, it will stop printing newspapers altogether.
[3] In 1989, Evansville Courier purchased a new 12-position flexographic printer
(the Printing Press). At that time, the flexographic method of printing was
expected to become the predominant method of printing newspapers, but
within a few years, it became apparent that the industry preferred using an
offset press rather than a flexographic press. At one time, there were as many
as thirty newspaper companies nationwide using flexographic press printers, but
now only twelve remain in use. The flexographic method of printing is more
expensive than the alternative offset method. Additionally, Evansville Courier
can no longer buy parts for the Printing Press from the manufacturer, meaning
that it must have parts specially manufactured or purchase used parts from
newspaper companies that once operated similar presses.
[4] In July 2011, Evansville Courier filed its 2011 tax return. The 2011 Return
included a separate schedule applying an abnormal obsolescence deduction to
the Printing Press and related equipment. Evansville Courier filed similar
returns for each of the 2013 and 2014 tax years. In sum, Evansville Courier
requested the following approximate abnormal obsolescence adjustments:
$649,398 for 2011; $3.5 million for 2013; and $5.1 million for 2014. The
abnormal obsolescence adjustments were disallowed by Vanderburgh County
for each of the three years.
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[5] The parties went through the required administrative process for each of the
three tax returns.
 In March 2011, the Vanderburgh County Assessor had assessed the value
of Evansville Courier’s personal property, including the Printing Press
and related equipment, to be approximately $8.6 million. Appellant’s
App. p. 4. Evansville Courier appealed that determination to the
Vanderburgh County Property Tax Assessment Board of Appeals (the
Vanderburgh County Board). Following an October 7, 2011, hearing,
the Vanderburgh County Board affirmed the assessment of Evansville
Courier’s personal property value to be approximately $8.6 million. Id.
at 7-8. On December 5, 2011, Evansville Courier filed a petition with the
Board seeking a review of the Vanderburgh County Board’s decision,
asking that its property be valued at approximately $7.4 million. Id. at 1-
3.
 In March 2013, the Vanderburgh County Assessor assessed the value of
Evansville Courier’s personal property to be approximately $8.57
million. Id. at 31. Evansville Courier appealed that determination to the
Vanderburgh County Board, which, following a September 23, 2013,
hearing, affirmed the assessment of the personal property value to be
approximately $8.57 million. Id. at 35. On November 8, 2013,
Evansville Courier filed a petition with the Board seeking a review of the
Vanderburgh County Board’s decision, asking that its property be valued
at approximately $5 million. Id. at 22-24.
 In March 2014, the Vanderburgh County Assessor assessed the value of
Evansville Courier’s personal property to be approximately $7.6 million.
Id. at 49. Evansville Courier appealed that determination to the
Vanderburgh County Board, which, following a January 9, 2015,
hearing, affirmed the assessor’s valuation. Id. at 48. On March 30, 2015,
Evansville Courier filed a petition with the Board seeking a review of the
Vanderburgh County Board’s decision, asking that its property be valued
at approximately $2.5 million. Id. at 42-44.
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On January 26, 2016, the Board held a combined evidentiary hearing on each
of Evansville Courier’s three pending petitions.
[6] At the hearing, Evansville Courier submitted appraisals prepared by Brad
Venisnik, an Accredited Senior Appraiser, in support of its claim for an
abnormal obsolescence deduction for the Printing Press and related equipment
for the years of 2011, 2013, and 2014. The appraisals were prepared in
accordance with the Uniform Standards of Professional Appraisal Practice.
Venisnik considered the cost, income, and market approaches to value. He
relied most heavily on the market approach because that approach “most
accurately quantifies all forms of depreciation and obsolescence.” Id. at 505.
Venisnik researched the market by talking with the original equipment
manufacturer, used equipment dealers, and other operators of two presses that
are similar to the Printing Press.
[7] Venisnik’s research indicated that (a) the original equipment manufacturer
would attach a value of $865,000 to the Printing Press for the 2011 tax year;
(b) no used equipment dealer had any interest in purchasing the Printing Press
or any indications of recent comparable sales; and (c) other newspaper
companies have discontinued operations of their flexographic presses and have
sold the component parts for their scrap value. Venisnik concluded that it
would be impractical to use the Printing Press for anything other than printing
newspapers and that it lacks functionality for its best use because of an inherent
inability to print color copy on both sides of the page. He therefore determined
that it is not possible to cure the causes of the Printing Press’s obsolescence.
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[8] Based on his research, Venisnik placed a value on the Printing Press and related
equipment for 2011 of $1.2 million. He calculated abnormal obsolescence by
using a mathematical computation equal to the difference between the
reportable value of the Printing Press and its equipment and the appraised
value. For 2011, the amount of abnormal obsolescence was approximately $4.3
million. For 2013 and 2014, the appraised value of the Printing Press and
related equipment was $820,000 and $632,000, respectively. Thus, the amount
of abnormal obsolescence for each of these years was approximately $4.44
million for 2013 and $4.47 million for 2014.
[9] As part of its case-in-chief, Vanderburgh County called Bill Fluty, the County
assessor, to testify. During Fluty’s testimony, the County offered into evidence
an evaluation of Venisnik’s market value appraisal of the property in 2014.
Evansville Courier objected to this exhibit because it had not been provided to
Evansville Courier five days before the hearing as required by the Indiana
Administrative Code and because it was hearsay evidence. The County
responded that the exhibit was rebuttal testimony and therefore did not have to
comply with the five-day timeline. The Board took the issue under advisement
and completed the hearing.
[10] On September 19, 2016, the Board issued its final determination, which denied
Evansville Courier’s petitions. In relevant part, the Board found and held as
follows:
16. [With respect to the exhibit that was not timely disclosed
by the County,] [w]hile the Board’s procedural rules do not
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specifically exempt rebuttal evidence from the exchange
requirements, the Board does recognize a general exception for
rebuttal evidence. . . . The Board may exclude evidence offered
as rebuttal that should have been presented in the party’s case-in-
chief, but is not required to do so. Here, the Board is willing to
make an exception because the exhibit was specifically offered to
challenge the validity of the Petitioner’s appraisals. . . . Hence,
the Petitioner’s objection is overruled as it pertains to the pre-
hearing disclosure requirement.
***
18. Respondent’s Exhibit 4 is hearsay, and the Respondent
failed to point to any recognized hearsay exception. However, it
does nothing to either prove or disprove the property’s market
value-in-use. As such, the exhibit is admitted. Because the
Petitioner objected to the exhibit, it cannot serve as the sole basis
for the Board’s decision. The Board notes however, the decision
to allow Respondent’s Exhibit 4 does not affect the final
determination.
***
72. Here, the Petitioner is making a claim of “abnormal
obsolescence.” The argument was made that “unforeseen
changes in market value have caused the subject property to
suffer from abnormal obsolescence.” These alleged unforeseen
changes include increased competition from various news
sources, widespread access to the internet, the delivery of news
through various social media outlets, and online advertising that
negatively affects advertising revenue.
73. The Petitioner’s press is 25 years old. It is reasonable to
conclude that significant technological changes can, and will,
occur over that time span. Examples of such changes include the
Indiana Tax Court | Opinion 02T10-1611-TA-55 | June 5, 2017 Page 7 of 20
virtual disappearance of items such as Beta videocassette
recorders, cassette audiotapes, and typewriters. The invention of
a newer, more productive piece of equipment capable of
producing a better quality item does not necessarily mean an
older, currently utilized item should be considered abnormally
obsolete.
74. No argument was made that the subject property is not
capable of, or is not currently, performing the very task for which
it was purchased. In fact, the press is still utilized daily. Further,
just because other forms of “media” have become more
prevalent, that does not necessarily qualify the items for
“abnormal obsolescence.” As the Board has previously held,
common events in the nature of business, such as increased
competition, do not amount to abnormal obsolescence.
75. Additionally: in order to qualify for “abnormal
obsolescence,” the obsolescence must be of a “non-recurring
nature.” The Board has heard previous appeals that offer
guidance on the issue of “non-recurring nature.” See Jofco, Inc. v.
Bainbridge Township Ass’r, et al, Pet. No. 19-018-04-1-7-00006
(Ind. Bd. Tax Rev. December 28, 2005); and Kimball Int’1, Inc. v.
Bainbridge Twp. Ass ’r, Pet. Nos.19-018-04-1-7-00007, 19-018-04-1-
7-00008, and 19-018-04-1-7-00009 (Ind. Bd. Tax Rev. December
30, 2005); see also Ind. Code § 4.2-9-3(a).
76. The petitioners in Jofco and Kimball engaged in business
dealings in New York and Washington. Both suffered a
substantial decline in business, roughly 35% to 40%, following
the “unexpected and unforeseen” terrorist attacks that occurred
on September 11, 2001, in New York City and elsewhere. The
Board agreed that, based upon a fact sensitive inquiry, the
Petitioners qualified for an “abnormal obsolescence” deduction.
Here, the Petitioner failed to point to a single, specific, non-
recurring triggering event that would justify a determination of
“abnormal obsolescence.” Further, the Petitioner failed to
Indiana Tax Court | Opinion 02T10-1611-TA-55 | June 5, 2017 Page 8 of 20
present any evidence its losses were remotely comparable to
those suffered by the Petitioners in Jofco and Kimball.
77. The Petitioner failed to show that the property under
appeal suffered from “abnormal obsolescence.” . . .
78. Even if the Board were to find the subject property has
some degree of “abnormal obsolescence” the claim would still
fail. The Petitioner’s appraiser failed to provide sufficient
probative evidence that the cause for “abnormal obsolescence”
resulted in a quantifiable loss in value. Instead of utilizing the
appropriate method of calculating the assessment, the Petitioner’s
appraiser chose to use the “market approach.” Methods of
assessing personal property are substantially different from those
used to assess real property, as previously explained. Further,
even if Mr. Venisnik’s approach to value had been appropriate,
his appraisal does not provide a reliable market value for the
property under appeal.
79. The sales comparison approach, or as Mr. Venisnik
referred to it “the market approach,” requires gathering sufficient
data on recently sold assets that are similar to the subject
property, analyzing the value characteristics of those comparable
assets, comparing the characteristics to those of the subject
property and making appropriate adjustments for differences. It
is difficult to see how Mr. Venisnik could have appropriately
utilized this methodology when, according to his own testimony,
there is “not an active market for the flexographic press.” Mr.
Venisnik was unable to cite any “actual sale” of a flexographic
press. Instead, he relied on “conversations” with the original
equipment manufacturer, used equipment dealers, and other
operators of flexographic presses. No probative evidence was
presented that would persuade the Board that these individuals
are able to establish a reliable value for a flexographic printing
press. Further, Mr. Venisnik failed to show that “conversations”
Indiana Tax Court | Opinion 02T10-1611-TA-55 | June 5, 2017 Page 9 of 20
regarding “opinions” of value followed generally accepted
appraisal practices.
80. With regard to the Petitioner’s argument stating it was
“negatively impacted” by the decision to purchase a flexographic
press rather than an offset press, this argument falls short.
Presumably, a reasonably prudent purchaser of a multi-million
dollar piece of equipment would be aware of the risks in
purchasing equipment. The Petitioner acknowledges it was a
“bad business decision.” But bad business decisions do not
justify a finding of “abnormal obsolescence.”
81. The Petitioner failed to establish a prima facie case for
reducing the assessed value of its personal property. Where a
Petitioner has not supported its claim with probative evidence,
the Respondent’s duty to support the assessment with substantial
evidence is not triggered.
Appellant’s App. p. 86-108 (some internal citations omitted). Evansville
Courier now seeks judicial review of the Board’s decision.
Discussion and Decision
I. Standard of Review
[11] The Court gives great deference to decisions made by the Board when it acts
within its authority. Hamilton Cty. Assessor v. Duke, 69 N.E.3d 567, 569 (Ind.
Tax Ct. 2017). Accordingly, the Court will reverse only if the Board’s decision
is arbitrary, capricious, an abuse of discretion, or otherwise not in accordance
with law; contrary to constitutional right, privilege, or immunity; in excess or
short of statutory jurisdiction, authority, or limitations; without observance of
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procedure required by law; or unsupported by substantial or reliable evidence.
Ind. Code § 33-26-6-6(e). The party challenging the Board’s decision bears the
burden of demonstrating its invalidity. Hamilton Cty., 69 N.E.3d at 569.
[12] The Court defers to the Board’s factual findings, but only if they are supported
by substantial evidence. 6787 Steelworkers Hall, Inc. v. Scott, 933 N.E.2d 591, 595
(Ind. Tax Ct. 2010). Evidence is substantial “‘if it is more than a scintilla and
less than a preponderance or if it would be accepted as adequate to support a
conclusion by a reasonable mind.’” Id. at 595 n.7 (quoting French Lick Twp. Tr.
Assessor v. Kimball Int’l, Inc., 865 N.E.2d 732, 739-40 n.14 (Ind. Tax Ct. 2007)).
The Court applies a de novo standard of review to the Board’s legal
conclusions. 6787 Steelworkers, 933 N.E.2d at 595. In conducting the review,
the Court will neither reweigh evidence nor assess witness credibility. Id.
II. Untimely Submission of Exhibit
[13] Evansville Courier first argues that the Board erred by admitting into evidence a
document submitted by the County that was not provided to Evansville Courier
according to the requisite timeline.
[14] The Indiana Administrative Code mandates that a party to an administrative
appeal before the Board “must provide” copies of documentary evidence to all
other parties at least five business days before the hearing. 52 Ind. Admin.
Code 2-7-1(b)(1) (emphasis added). Failure to comply with this rule “may serve
as grounds to exclude the evidence[.]” 52 I.A.C. 2-7-1(b)(f). This Court has
explained as a general matter that the purpose of the discovery rules is “to allow
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a free exchange of fact information and to permit each party to prepare its case
for trial without concerns about trial by surprise or ambush.” Brandenburg
Indus. Serv. Co. v. Ind. Dep’t of State Revenue, 26 N.E.3d 147, 152 (Ind. Tax Ct.
2015). And indeed, our Supreme Court has unequivocally and “consistently
rejected a ‘gaming view’ of the litigation process.” Outback Steakhouse of Fl., Inc.
v. Markley, 856 N.E.2d 65, 75 (Ind. 2006).
[15] It is undisputed that the County failed to provide a copy of its exhibit criticizing
Venisnik’s appraisal at least five business days before the hearing. The County
argued, and the Board ultimately held, that because the evidence was rebuttal
evidence, its disclosure was not required.
[16] The Court disagrees. It is well established that “the nondisclosure of a rebuttal
witness is excused only when that witness was unknown and unanticipated;
known and anticipated witnesses, even if presented in rebuttal, must be
identified pursuant to a court order, such as a pre-trial order, or to a proper
discovery request.” McCullough v. Archbold Ladder Co., 605 N.E.2d 175, 179
(Ind. 1993) (emphasis added). Here, the County was well aware of the nature
of Venisnik’s testimony and arrived at the hearing armed with evidence to rebut
that testimony. The exhibit in question was dated January 20, 2016, and the
hearing occurred on January 26, 2016, meaning that this exhibit was known,
anticipated, and actually available to be disclosed to Evansville Courier within
the requisite timeline. Appellant’s App. p. 774-90. The County’s failure to do
so constitutes precisely the type of “gotcha” litigation that Indiana courts abhor.
Under these circumstances, the admission of this exhibit was erroneous.
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III. Abnormal Obsolescence
A. General Principles
[17] Generally, all property located in the State of Indiana is required to be taxed as
either personal or real property. 50 Ind. Admin. Code 4.2-1-3. With respect to
personal property, a tax return must be filed in each taxing district where
property has a tax situs subject to certain qualifications. 50 I.A.C. 4.2-4-2(a).
[18] Taxpayers must record the cost of depreciable property, both real and personal,
and use that cost in determining the value of the depreciable personal property
subject to assessment. Id. Ordinary depreciation of personal property is
calculated pursuant to a set schedule contained in the Indiana Administrative
Code. This schedule automatically reflects all adjustments for Indiana property
tax purposes except for abnormal obsolescence. 50 I.A.C. 4.2-4-8.
Consequently, Indiana taxpayers are not allowed adjustments to personal
property assessments for normal obsolescence.
“Normal obsolescence” means the anticipated or expected
reduction in the value of business personal property that can be
foreseen by a reasonable, prudent businessman when property is
acquired and placed into service. In general, it includes the
expected, declining value through use, gradual decline in value
because of expected technological improvements, the gradual
deterioration or obsolescence through the mere passage of time,
and the general assumption that such property will have a
minimum value at the end of its useful life.
50 I.A.C. 4.2-9-2
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[19] Indiana taxpayers are, however, allowed adjustments to personal property
assessments for abnormal obsolescence.
(a) “Abnormal obsolescence” means that obsolescence which
occurs as a result of factors over which the taxpayer has no
control and is unanticipated, unexpected, and cannot
reasonably be foreseen by a prudent businessman prior to the
occurrence. It is of a nonrecurring nature and includes
unforeseen changes in market values, exceptional
technological obsolescence, or destruction by catastrophe
that has a direct effect upon the value of the personal
property of the taxpayer at the tax situs in question on a
going concern basis.
(b) An example of unforeseen change in market value is a
government ban on the sale of a drug or chemical due to a
new discovery or determination may cause that item or the
production equipment used to produce it to be abnormally
obsolete. A specific example of this would be cyclamate.
In this case the equipment used to produce it may be
eligible for abnormal obsolescence.
(c) . . . [A]bnormal obsolescence due to exceptional
technological obsolescence should be recognized to the
extent that it causes the subject property to be incapable of
use for current production or adaption to a different use.
The invention of a newer, more productive piece of
equipment which would produce a better quality item or
utilization of state of the art technology that produces
more efficiently at a lower cost of production does not
cause an older, currently used asset to be considered
abnormally obsolete. If the asset is still capable of performing
the function for which it was acquired, and is producing both on
and before the assessment date, no adjustment shall be allowed.
The use of historical cost, short useful life, and accelerated
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depreciation in developing the prescribed true tax value
percentages result in an equitable assessment on the
property in question.
50 I.A.C. 4.2-9-3 (emphases added). Abnormal obsolescence “includes the
impairment of desirability and usefulness brought about by new inventions and
improved processes for production, or the impairment of functional capacity or
efficiency if the inadequacy or overadequacy causes a loss in value and has
made the property incapable of continued use for a prolonged period during the
assessment year.” 50 I.A.C. 4.2-4-8(a). The term “abnormal obsolescence”
must be strictly construed and “limited to a situation where unforeseen changes
in market values, exceptional technological obsolescence, or destruction by
catastrophe occurs, providing that such events have a direct effect upon the
valuation of the depreciable personal property of the taxpayer . . . .” 50 I.A.C.
4.2-4-8(c).
[20] Abnormal obsolescence “should be recognized to the extent that the property
qualifies for the adjustment and the taxpayer is able to substantiate the facts,
circumstances, and amount of the claim in order to properly determine the true
tax value of the subject property.” 50 I.A.C. 4.2-9-4. If a taxpayer substantiates
a claim for abnormal obsolescence, an adjustment “will be allowed.” 50 I.A.C.
4.2-9-6.
B. The Printing Press
[21] Evansville Courier contends that the Board erred by concluding that Evansville
Courier failed to establish the abnormal obsolescence of the Printing Press and
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its related equipment. As noted above, the Board based this conclusion on two
primary factors: (1) Evansville Courier “failed to point to a single, specific,
non-recurring triggering event,” such as 9/11, justifying a determination of
abnormal obsolescence; and (2) the Printing Press is still operable and has five
years remaining of predicted useful service life. Appellant’s App. p. 106.
[22] There are two possible ways in which the Printing Press could qualify for an
abnormal obsolescence adjustment: unforeseen changes in market values or
exceptional technological obsolescence. Turning first to the latter, the
Administrative Code requires that to make a successful claim of exceptional
technological obsolescence, the personal property at issue must not be “still
capable of performing the function for which it was acquired” and must not still
be “producing both on and before the assessment date[.]” 50 I.A.C. 4.2-9-3(c).
Here, it is undisputed that the Printing Press was still capable of performing the
function for which it was acquired, was still producing output both on and
before the assessment dates, and still had at least five years left of continuing
functionality. Appellant’s App. p. 106 (noting that Venisnik’s own testimony
established that there were “five years remaining of predicted useful service life”
and that the Printing Press “continues to perform the purpose for which it was
purchased twenty-five years ago”). Consequently, the plain terms of the
Indiana Administrative Code mandate that Evansville Courier is not entitled to
an abnormal obsolescence adjustment for the reason of exceptional
technological obsolescence, and the Board did not err in so holding.
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[23] The other possible way in which Evansville Courier could establish abnormal
obsolescence was to show unforeseen changes in market values of the personal
property at issue. The example of unforeseen changes in market values
provided in the Indiana Administrative Code is the case of a pharmaceutical
manufacturer that produces a drug that is suddenly banned in the United States,
rendering the company’s equipment used to produce that drug abnormally
obsolescent. 50 I.A.C. 4.2-9-3(b). The examples provided by the Board in the
instant case involved two corporate entities that suffered a substantial decline in
business following the 9/11 terrorist attacks. Appellant’s App. p. 106.
[24] Evansville Courier directs our attention to the evidence in the record tending to
show a dramatic decline in the printed newspaper industry over the past
decade. According to Evansville Courier, this precipitous drop in subscribers
and circulation is directly linked to new technology and inventions, including
smartphones, high speed internet, and social media such as Facebook and
Twitter. Additionally, newspapers compete with 24-hour news coverage on
cable news networks and also compete for classified advertising dollars with
online services such as Craigslist.
[25] As noted above, to qualify as abnormally obsolescent, the obsolescence must be
unanticipated, unexpected, unforeseen, and non-recurring. Even if the Court
agrees solely for argument’s sake that the dramatic change in the newspaper
industry over the past decade has been unanticipated, unexpected, and
unforeseen, it is far more difficult to conclude that it is “non-recurring.” That
term is not defined in the Indiana Administrative Code. Merriam-Webster
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Dictionary defines “nonrecurring” as follows: “nonrecurrent; specifically:
unlikely to happen again—used of financial transactions that affect a profit and
loss statement abnormally.” Merriam-Webster Dictionary, at
https://www.merriam-webster.com/dictionary/non-recurring (last visited June
1, 2017). “Nonrecurrent,” in turn, is defined as “not recurring,” and “recur” is
defined in relevant part as “to occur again after an interval: occur time after
time.” Merriam-Webster Dictionary, at https://www.merriam-
webster.com/dictionary/recurring (last visited June 1, 2017). In other words,
something that is “non-recurring” is a unique event that is unlikely to occur
again.
[26] In our view, an ongoing downward trend of an industry that has been occurring
slowly over the course of a decade, and is still happening, cannot logically be
defined as “non-recurring.” It is more properly called “ongoing,” or “currently
occurring.”
[27] We acknowledge the administrative rule regarding “adjustment for
obsolescence,” which states that abnormal obsolescence “includes the
impairment of desirability and usefulness brought about by new inventions and
improved processes for production.” 50 I.A.C. 4.2-4-8(a). At first blush, it may
seem that this language, which implies a possibility of gradualness, conflicts
with the requirement that the obsolescence be non-recurring. On closer
examination, however, the language can be reconciled.
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[28] Initially, it is important to note that Rule 4-8 refers to the definition of abnormal
obsolescence found in Rule 9-3, which includes the “non-recurring”
requirement. Id. Furthermore, Rule 4-8 requires that the term “abnormal
obsolescence” be strictly construed. Id. at -8(c). Finally, the Court believes that
an impairment of desirability and usefulness brought about by new inventions
and improved processes can, in fact, result from a non-recurring event and be of
a non-recurring nature. The invention of the VHS videocassette system would
be such an event from the perspective of companies manufacturing Betamax
systems. The invention of MP3 players would be such an event from the
perspective of companies manufacturing compact discs and compact disc
players. There are undoubtedly countless other examples of industries facing a
dramatic drop in the value of personal property because of a single new
invention or a single new process development.
[29] Here, unfortunately for Evansville Courier and the other struggling newspapers
around the country, a whole host of events, inventions, and developments have
taken place to cause the gradual decline of the industry. As noted above,
among other things, we can look to high speed internet, smartphones, 24-hour
television news, Facebook, Twitter, internet-only news providers such as
Buzzfeed, etc. There is no one, non-recurring event on which blame can be
placed. Under these circumstances, Evansville Courier has not established that
the obsolescence of its property is non-recurring in nature. Therefore, the
Board did not err by finding that Evansville Courier has not met its burden of
establishing a prima facie case or by denying its petitions.
Indiana Tax Court | Opinion 02T10-1611-TA-55 | June 5, 2017 Page 19 of 20
[30] The judgment of the Board is affirmed.
[31] SO ORDERED this 5th day of June 2017.
__________________________________
John G. Baker, Special Judge
Indiana Tax Court
DISTRIBUTION:
Joshua C. Neal, William A. Ramsey, Winston Lin, and Jessica R. Gastineau
Indiana Tax Court | Opinion 02T10-1611-TA-55 | June 5, 2017 Page 20 of 20