Allied-Signal, Inc. v. Wyoming State Board of Equalization ( 1991 )

THOMAS, Justice.

The essential question to be resolved in this case is the value to be ascribed to stock in a new corporation that is exchanged for the assets of sister corporations for purposes of the state sales tax. In a time period spanning part of 1985 and part of 1986, a corporate reorganization was structured in which the assets held by wholly owned subsidiary corporations were exchanged for 100 percent of the stock in a newly formed subsidiary corporation with no assets. In addition, the acquiring corporation assumed certain liabilities. The Wyoming State Board of Equalization ruled that this transaction was a transfer for consideration and subject to the imposition of the sales tax under the laws of Wyoming in effect at that time. The district court upheld the ruling by the State Board of Equalization which assessed the sales tax at $2,838,767. We acquiesce in the determination that, under the law in effect at that time, this was a transfer for consideration resulting in a sales tax. We hold, however, that the only consideration paid for the assets was the stock of the acquiring corporation and that, while certainly that stock was worth at least the expenses of capitalization, the record is silent as to that amount. Therefore, there is no proof of the value of the consideration paid for the assets. The net effect is that the stock that was transferred has no value according to this record, and there is no basis upon which to impose a Wyoming sales tax on this transaction. The judgment of the district court is reversed.

Allied-Signal, Inc. (Allied-Signal), presents the following issues for review:

“A. Whether the District court erred in sustaining the finding of the State Board of Equalization that the subject transaction constituted a ‘Sale’ within the meaning of Wyo. Stat. § 39 — 6—402(a)(iii).

“1. Whether the legislature did not intend to subject such transfers to tax.

“2. Whether the District Court erred in concluding that Appellant did not carry its burden of proving a longstanding policy of the department.

“3. Whether the District Court erred in concluding that the statute is not ambiguous.

“4. Whether the ambiguity in the meaning of the term ‘consideration’ as it applies to an incorporation transfer should be resolved by this court finding that the stock received upon an incorporation transfer is not consideration for purposes of the Act.

“B. Whether the imposition of tax on Allied’s transfer was in violation of the Wyoming Administration Procedure Act and the due process provisions of the Wyoming and Federal Constitutions.

“C. Whether, even if the subject transaction constituted a ‘sale,’ the State Board of Equalization acted arbitrarily, capriciously and contrary to law in finding that the intrinsic value of the stock received by Allied, and therefore the amount subject to tax, was greater than zero and the District Court erred in sustaining that finding.”

The Wyoming State Board of Equalization (Board), as appellee, sees the issues in this way:

“Has the appellant carried its burden of proving that the board’s decision is contrary to the standards established for this review under W.S. 16-3-114(c)?

“(1) Is W.S. 39 — 6—402(a)(iii)(1986) ambiguous?

“(2) Does the rule of construction cited by appellant apply? If so, does it change the result of this case?

“(3) Is the decision supported by substantial evidence?”

In September of 1985, Allied-Signal acquired Allied Corporation (Allied), which was a public corporation involved in the chemical, automotive, and aerospace industries. Allied became a wholly-owned subsidiary of Allied-Signal. One of the major assets of Allied was a soda ash mining and manufacturing facility located near Green River. In December of 1985, Allied-Signal caused One Newco to be incorporated under the laws of the state of Delaware. The officers and directors of this new company were composed of either officers or employees of Allied or one of its affiliates.

One Newco became an active entity on May 21, 1986 when Allied transferred its Wyoming soda ash business plus the assets of various other chemical companies to One Newco in exchange for the entire first issue of One Newco stock. In addition, One Newco assumed certain liabilities incurred earlier by Allied in connection with the assets that were transferred. Prior to that time, One Newco had acquired no assets whatsoever and, as a result of the transaction, it became a wholly-owned subsidiary of Allied. Through this arrangement, Allied continued to maintain control and ownership of the assets and businesses transferred to One Newco. Allied Signal was the corporate owner of Allied, and it possessed ultimate control and ownership over the entire business structure that included One Newco. Allied Signal’s asset pool was not affected by the exchange of property for stock other than to the extent of some ostensible increase in net worth reflected by a return of the intrinsic value contained in the incorporation of One Newco. One Newco changed its name to General Chemical Corporation following the transaction.

As a part of the transfer of assets for stock, Allied assumed liability for all taxes associated with the formation of One New-co. Allied reported the transfer on its May, 1986 sales tax return and remitted sales tax in the amount of $2,858,593. The following January, it filed an amended return and requested a refund of $2,838,767 from the Wyoming Department of Revenue and Taxation (Department) on the ground that the exchange of assets of Allied for One Newco stock did not constitute a taxable event. The request for refund was denied and, on appeal, the Board ruled that the transfer did constitute a “sale” and that the stock received by Allied amounted to consideration, thus upholding the Department’s denial. In order to establish the amount of taxes due, the stock was found to be worth the value of the assets received.

Subsequently, Allied and Allied-Signal merged and Allied-Signal became the successor in interest to all claims previously initiated by Allied. In August of 1989, Allied-Signal petitioned the district court to review the order of the Board. The district court affirmed the agency’s determination.

At the time of the transaction upon which the tax was imposed, the controlling Wyoming law, found in § 39 — 6—402(a)(iii), (iv), and (v), W.S.1977, (May 1985 Repl.), reads as follows:

“(a) As used in this article:

* * # # # #

“(iii) ‘Sale’ means any transfer of title or possession for a consideration and includes the fabrication of tangible personal property when the materials are furnished by the purchaser;

“(iv) ‘Sales price’ means the consideration paid by the purchaser of tangible personal property excluding the actual trade-in value allowed on tangible personal property exchanged at the time of transaction, admissions or services which are subject to taxation as provided by this article and excluding any taxes imposed by the federal government or this article;

“(v) ‘Tangible personal property’ means any property not real or intangible * * * ft

It is to be noted that the statute defines a sale as any transfer of title or possession for a consideration and then describes the sales price as a consideration paid by the purchaser. These provisions were promulgated initially with the Selective Sales Tax Act of 1937, Ch. 102, 1937 Wyo. Sess. Laws, but the provision was not enforced to impose a tax upon the contribution of assets to a wholly-owned subsidiary in exchange for the stock of the subsidiary until 1982. In that year, the Wyoming Telephone Company contested case culminated in an affirmation by the Board of an assessment made on exactly such an exchange. The case involved a factual situation quite similar to that involved in this case, but the disputed tax was $584.23. The Board’s ruling was not appealed. See The Wyoming Lawyer, Vol. VI, No. 2, (June 1983) (reviews the Administrative decision).

The testimony of the director of the Internal Operations Division of the Department of Revenue and Taxation in this case is to the effect that the Department, at least prior to the 1982 case, had believed that a transfer upon an incorporation such as that occurring in this instance would not be the subject of a sales tax assessment. In 1985, however, the Department, apparently upon its conclusion that its prior interpretation of the statutes had been either erroneous or lax, adopted Chapter III, Section 5 of the Rules and Regulations of the Wyoming State Tax Commission, in which a transfer of tangible personal property pursuant to the sale of a business was declared to be subject to the sales tax.

At the next general session of the legislature following promulgation of the new regulation by the Department, the legislature, apparently reacting to the Department’s changed posture, expanded the language of the applicable statutes to establish express exceptions for certain types of transactions. Section 39-6-402(a)(iii), (iv), and (v), W.S.1977 (July 1990 Repl.), in pertinent part, now read as follows:

“(a) As used in this article; * * *

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“(iii) ‘Sale’ means any transfer of title or possession for a consideration including the fabrication of tangible personal property when the materials are furnished by the purchaser but excluding an exchange or transfer of tangible personal property upon which the seller has directly or indirectly paid sales or use tax incidental to:

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“(B) The formation of a corporation by the owners of a business and the transfer of their business assets to the corporation in exchange for all the corporation’s outstanding stock, except qualifying shares, in proportion to assets contributed;

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“(E) The transfer of assets from a parent corporation to a subsidiary corporation which is owned at least eighty percent (80%) by the parent corporation, which transfer is solely in exchange for stock or securities of the subsidiary corporation;

“(F) The transfer of assets from a subsidiary corporation which is owned at least eighty percent (80%) by the parent corporation to a parent corporation or to another subsidiary which is owned at least eighty percent (80%) by the parent corporation, which transfer is solely in exchange for stock or securities of the parent corporation or subsidiary which received the assets;

* * * * * *

“(K) The transfer of assets between parent and closely held subsidiary corporations, or between subsidiary corporations closely held by the same parent corporation, or between affiliated companies, partnerships and corporations which are owned in similar percentages by the same persons. ‘Closely held subsidiary corporation’ means a corporation in which the parent corporation owns stock possessing at least eighty percent (80%) of the total combined voting power of all classes of stock entitled to vote and owns at least eighty percent (80%) of the total number of shares of all other classes of stock;

* * * * * *

“(M) The sale of a business when sold to a purchaser of all or substantially all of the assets of the business when the purchaser continues to use the tangible personal property in the operation of an ongoing business.

“(iv) ‘Sales price’ means the consideration paid by the purchaser of tangible personal property excluding the actual trade-in value allowed on tangible personal property exchanged at the time of the transaction, admissions or services which are subject to taxation as provided by this article and excluding any taxes imposed by the federal government or this article;

“(v) ‘Tangible personal property’ means any property not real or intangible; * * * )>

Pursuant to these provisions, an exchange of assets like that involved in this case would not be taxable. The new language in the statutes precludes such a result.

In support of its position that the transaction was not taxable, Allied-Signal argues that the district court erred in sustaining the ruling of the Board because the exchange of assets that occurred in the transaction sought to be taxed simply is not a “sale” within the contemplation of § 39 — 6—402(a) (iii) even under the language found in the statute at the time this transfer occurred. The construction that Allied-Signal wishes to have applied is that the statutory language can be harmonized if the word “consideration,” as it appeared in the statute, is held not to include stock or other corporate assets when they are exchanged in a transfer that is part of a new incorporation. Allied-Signal, in support of this urged construction, points to the prompt amendment by the legislature to provide exemptions from the regulations promulgated by the Board that reached this transaction. Allied-Signal argues that this circumstance, when considered in the context of a long-standing silence that apparently manifested acquiescence in the Department’s past refusal to tax such transfers, demonstrates ineluctably that transfers such as the one between Allied and One Newco were not intended to be taxed even before the protective amendments had been accomplished. See State Board of Equalization v. Tenneco Oil Company, 694 P.2d 97 (Wyo.1985); Town of Pine Bluffs v. State Board of Control of State of Wyoming, 647 P.2d 1365 (Wyo.1982).

Allied-Signal’s legal theories hinge on the premise that the intent that is manifested by the circumstances in regard to legislative action, or inaction as the case may be, mandates a conclusion that incorporation transfers like this one should not be taxed. Allied-Signal argues that statutes must be applied and enforced according to the intent of the legislature and discounts the fact that the statutory language in vogue at the time failed to inhibit taxation by the Department and, in fact, even apparently suggests it. As a further argument in support of its approach, Allied-Signal urges that the version of the statute in effect at the time this transaction occurred is ambiguous per se and thus, demands construction. This argument is derived primarily from Tenneco and hinges upon the long interpretation by the Board in a fashion contrary to that ultimately applied. See Tenneco. Cf. Basin Electrical Power Cooperative v. State Board of Control, 578 P.2d 557 (Wyo.1978) (divergent contentions by parties can be evidence of ambiguity). Allied-Signal invokes this latter argument in an effort to refute plain language in the statute and avoid the interpretation that would justify the imposition of the disputed tax.

These arguments were rejected in the district court because of the conclusion of that court that the pertinent statutory language was unambiguous and neither required nor permitted construction to reach a determination of legislative intent. The trial court also ruled that Allied-Signal, in spite of its allegations to the contrary, had failed to prove the existence of the longstanding departmental policies it claimed were indicative of the ambiguity that would justify a different ruling. See Tenneco. The district court also alluded to various administrative decisions, though they were not named, that, in the judge’s view, cast doubt on Allied-Signal’s stance, and the court then ruled that the language of the statute mandates that an incorporation transfer is a taxable event. This is the position that the Board espouses in its argument in support of the rationale of the district court.

Allied-Signal has now chosen to rest its case on the position previously described. It also contends that the imposition of the tax on this transfer is contrary to the Wyoming Administrative Procedure Act and the due process provisions of both the federal and the state constitutions. Furthermore, it contends that the Board acted arbitrarily, capriciously, and contrary to law in determining that the value of stock received by Allied in exchange for its assets was greater than zero. This last argument, in a different context, becomes the persuasive position in this case.

We must invoke the rule that this court looks only to the intent of the legislature when enforcing or construing statutes. Billis v. State, 800 P.2d 401 (Wyo.1990); Rocky Mountain Oil and Gas Association v. State Board of Equalization, 749 P.2d 221 (Wyo.1987); Tenneco; McGuire v. McGuire, 608 P.2d 1278 (Wyo.1980); Woodward v. Haney, 564 P.2d 844 (Wyo.1977). The rule is absolute and controlling. Strict adherence to our Wyoming constitution demands that the judicial branch of government recognize that it is without discretion, nor does it have any latitude, to apply statutes contrary to legislative intent once that intent has been ascertained.

Legislative intent must be ascertained initially and primarily from the words used in the statute. Phillips v. Duro-Last Roofing, Inc., 806 P.2d 834 (Wyo. 1991); Wyoming Workers’ Comp. v. Halstead, 795 P.2d 760 (Wyo.1990); Halliburton Co. v. McAdams, Roux & Associates, Inc., 773 P.2d 153 (Wyo.1989); Dept. of Revenue and Taxation of State of Wyo. v. Hamilton, 743 P.2d 877 (Wyo.1987); Huber v. City of Casper, 727 P.2d 1002 (Wyo. 1986); In re Adoption of MM, 652 P.2d 974 (Wyo.1982); Oroz v. Hayes, 598 P.2d 432 (Wyo.1979); Seyfang v. Board of Trustees of Washakie County School Dist. No. 1, 563 P.2d 1376 (Wyo.1977). When the words used are clear and unambiguous, a court risks an impermissible substitution of its own views, or those of others, for the intent of the legislature if any effort is made to interpret or construe statutes on any basis other than the language invoked by the legislature. Our precedent demonstrates that this rule also is an absolute. If the language selected by the legislature is sufficiently definitive, that language establishes the rule of law. Any additional construction can be resorted to only if the wording is ambiguous or unclear to the point of demonstrating obscurity with respect to the legislative purpose or mandate. Blue Cross Ass’n v. Harris, 664 F.2d 806 (10th Cir.1981); Johnson v. Statewide Collections, Inc., 778 P.2d 93 (Wyo.1989); Wyoming Insurance Dept. v. Avemco Ins. Co., 726 P.2d 507 (Wyo.1986); Campbell v. State, 709 P.2d 425 (Wyo.1985); Tenneco. This inhibition upon statutory construction offers assurance that the legislative efforts and determinations of elected representatives will be made effective without judicial adjustment or gloss.

We previously have articulated the proposition that a statute is ambiguous only if it is found to be vague or uncertain and subject to varying interpretations. Story v. State, 755 P.2d 228 (Wyo.1988) cert. denied — U.S. -, 111 S.Ct. 106, 112 L.Ed.2d 76 (1990); Caton v. State, 709 P.2d 1260 (Wyo.1985); McArtor v. State, 699 P.2d 288 (Wyo.1985); Attletweedt v. State, 684 P.2d 812 (Wyo.1984); Matter of Reed’s Estate, 672 P.2d 829 (Wyo.1983). The converse of this proposition is that the statute is unambiguous if its wording is such that reasonable persons are able to agree as to its meaning with consistency and predictability. The question of whether an ambiguity exists in a statute is a matter of law to be determined by the court.

We are unable to discern pertinent language in this instance that is susceptible to more than one interpretation. The words set forth in the statute are apt and are adequately definitive of the rule intended by the legislature. Thus, as a matter of law, we are foreclosed from any resort to rules of construction that rely on extrinsic events. See Longfellow v. State, 803 P.2d 1383 (Wyo.1991); Tenneco; Jahn v. Burns, 593 P.2d 828 (Wyo.1979); Zanetti Riverton Bus Lines, Inc. v. State Board of Equalization, 485 P.2d 387 (Wyo.1971). Even though the legislature did not act before the Board’s rules were published, and did act promptly thereafter, that circumstance cannot be relied upon in this instance in construing the relevant provisions of the applicable statutes, § 39 — 6—402(a)(iii), (iv), (v), W.S.1977 (May 1985 Repl.). The language of the statute leads to no different result than the conclusion that the legislature’s intent at the time the statutes were enacted was that corporate exchanges like the one that occurred in this case were taxable events.

We agree with the district court that the transfer in this case must be considered a transfer for consideration and a taxable event. The application of the rules included in this analysis is dispositive of Allied-Signal’s claim that the district court erred in sustaining the finding of the Board that the exchange of assets for stock constituted a “sale” within the meaning of § 39 — 6—402(a)(iii), W.S.1977 (May 1985 Repl.).

The only matter requiring further resolution is the one involved in the issue posed by Allied-Signal in which it contends that the intrinsic value of the consideration recognized by the district court should not be greater than zero. We must address the actual value of the consideration furnished for the assets for purposes of computing the taxes that are due. In analyzing the methods to be used for determining the actual value of the consideration in exchange so as to verify the amount of taxes due, we first note the appropriate statutes. Section 39-6-404, W.S.1977 (May 1985 Repl.), provided in pertinent part:

“(a) Except as provided by W.S. 39-6-405, there is levied and shall be paid by the purchaser on all sales of twenty-five cents ($.25) or more an excise tax of three percent (3%) upon:

“(i) The sales price of every retail sale of tangible personal property within the state; * *

“Sales price,” pursuant to § 39-6-402(a)(iv), W.S.1977 (May 1985 Repl.), is defined as:

“(iv) ‘Sales price’ means the consideration paid by the purchaser of tangible personal property excluding the actual trade-in value allowed on tangible personal property exchanged at the time of transaction, admissions or services which are subject to taxation as provided by this article and excluding any taxes imposed by the federal government or this article; * * (Emphasis added.)

The first step in making the tax assessment based upon a sale of tangible personal property is to define which party to an exchange is the purchaser and which party is the seller. Only the value of consideration provided by the purchaser is used in the computations. Section 39-6-402(a)(iv), W.S.1977 (May 1985 Repl.). The value of the assets that are purchased is not specified as the relevant factor. In this instance, Allied had valuable commodities to transfer, and One Newco paid nothing in exchange but previously unissued stock in a business that had no substantial assets. We identify One Newco as the purchaser in the context of the statutory scheme and Allied as the seller. One Newco, which we perceived as having been created only for the purpose of acquiring Allied’s Wyoming soda ash facilities, purchased those assets plus assets of certain other chemical companies and paid for them with its first issue of stock. The price paid in the exchange, for purposes of the sales tax, had to be the fair market value of One Newco stock prior to the transfer. Allied-Signal has contended that the stock of One Newco had no inherent value since the new corporation had not acquired any assets or conducted any business, and it argues that the value of the consideration paid for the assets must be zero. The flaw in this analysis by Allied-Signal is that the stock of the new corporation possesses some value, at least the value of the expenses of incorporation, whatever that might be.

It follows that the value of the One New-co stock was not zero. The Board, to resolve this dilemma, computed the value of the stock that was exchanged as being the same as the value of the assets contributed by Allied for tax assessment purposes. It now argues that the taxes are to be computed only on the price paid by the purchaser, § 39-6-402(a)(iv), W.S.1977 (May 1985 Repl.), and, in the absence of evidence to the contrary, that price must be equivalent to the value received. That argument is equally flawed because there is no rule that contracting partners must be presumed to have traded property of equal value. Since One Newco had no physical assets at the time of the transfer and its stock had only the value intrinsic to its incorporation expenses, we recognize that the value of its stock at the time of the exchange was equivalent only to those expenses.

In this instance, the difficulty with the assessment is that the record is silent as to what the incorporation expenses actually were. We cannot speculate with respect to that amount and, on the record, we determine that the fair market value of One Newco stock for purposes of computing the applicable sales tax in this instance was either zero or nominal, even though we understand that the stock had some inherent value. Reiman Const. Co. v. Jerry Hiller Co., 709 P.2d 1271 (Wyo.1985); Krist v. Aetna Cas. & Sur., 667 P.2d 665 (Wyo.1983); Chrysler Corp. v. Todorovich, 580 P.2d 1123 (Wyo.1978). Because, on the record in this case, the value of the consideration paid by One Newco is essentially zero, we find no statutory justification for assessing taxes in the amount determined by the Department, which is the assessment then affirmed by the Board and the district court. The approach we take is somewhat different from the one argued by Allied-Signal, but the result is the same. No tax is due.

While the foregoing holding resolves this case, we deem it important to consider Allied-Signal’s contention that the statute under which the tax was assessed is ambiguous when incorporation transfers are involved and stock is the consideration for the purchase because the Department failed to enforce it in that way for the first forty-five years of its existence and then chose to so enforce it only for approximately the last five years. Allied-Signal relies upon Tenneco and argues that such a diametrical interpretation by the Board demonstrates that the statute is ambiguous and must be construed by the courts as a matter of law. As we have noted, this argument is presented in an effort to refute the clear and unambiguous language that we perceived in the statute.

In Tenneco, the court had before it a statute that provided:

“The following property is exempt from ad valorem taxation pursuant to the provisions of this act and includes facilities, installations, machinery or equipment attached or unattached to real property and designed, installed and utilized primarily for the elimination, control or prevention of air, water or land pollution, * * Section 35-11-1103, W.S.1977. (Emphasis added.)

Tenneco Oil Co. was engaged in the construction and operation of a trona mine and soda ash plant during 1980 through 1982. Various pollution control devices, that were required by law, had been installed as the plant proceeded toward completion. Most of these items had been acquired sometime prior to the time they were to be put in operation as a part of the functioning plant.

For some fifteen years, the Board had interpreted the tax statutes as exempting such devices from ad valorem taxes but, in 1982, the Department advised Tenneco Oil Co. that its newly installed pollution control devices could not be exempt that year because of a change in the interpretation of the applicable statute. The Department took the position that the word “utilize,” as it was employed in the statute, must be interpreted according to its ordinary meaning, which is “to make use of: turn to practical use or account,” Webster’s New Collegiate Dictionary 1289 (1979), and that pollution control devices were subject to taxation until the plant became operational. The Department’s logic was that the devices could not actually have been utilized prior to that time. On review, the Board accepted that argument and upheld the assessment by the Department, but the district court reversed that ruling. This court affirmed the district court on the ground that a change in administrative interpretation of the statute manifests an ambiguity justifying statutory construction, and that the correct construction, based entirely on extrinsic evidence of legislative intent, demonstrated that the pollution control devices were not subject to the disputed taxes.

It perhaps is important to recognize that the statutory language before the court in Tenneco could be subject to different interpretations. This court deferred to legislative intent and acknowledged the preeminence of plain language over any rules of statutory construction. In effect, the rationale that differing interpretations made by the same agency demonstrate an ambiguity was made in the context of words that were susceptible to more than one meaning. Tenneco was not a case, as argued by Allied-Signal, in which clear and unambiguous language not susceptible to varying meanings was found to be ambiguous because of inconsistent applications by the administrative agency. See Tenneco, 694 P.2d 97. See also McArtor, 699 P.2d 288, and Basin, 578 P.2d 557. The theory urged by Allied-Signal was afforded significant credibility in Tenneco because the court acknowledged that administrative statutory interpretations, particularly when combined with legislative silence as to those interpretations, should be afforded deferential treatment. Tenneco. See Stratman v. Admiral Beverage Corp., 760 P.2d 974 (Wyo.1988). The logic was appropriate under the unique circumstances found in Tenneco, but we would not encourage its use generally. Tenneco, whatever its perceived similarities may be, does not control to the point of establishing a mechanism to override clear statutory language. Its teachings go no further than identifying and describing a tool that a court may use to resolve an ambiguity once one has been found to be present. That evidentiary tool, in and of itself, should not establish the ambiguity, and we do not understand that the holding in Tenneco is any different.

Our rationale for this observation is found essentially in the realization that inconsistent statutory interpretations often are the product of circumstances that do not really involve an ambiguity. An inconsistent interpretation could be the product of simple error, a change in circumstances, a change in philosophy by the decision makers, or even a change in their identity. Because of the varying possibilities that may lead to inconsistent statutory applications, we do not choose to establish a precedent in which those differing interpretations establish an ambiguity that will justify invoking rules of construction based on extrinsic considerations. Furthermore, we recognize a subtle invasion of the separation of powers doctrine if Tenneco is applied as Allied-Signal proposes because it is clear that it is the role of the courts to determine ambiguity in a statute. If ambiguity must be recognized because of inconsistent interpretations by the executive branch, then the executive branch, and not the judicial branch, is establishing the ambiguity. That would not comport with Article 2, Section 1 of the Constitution of the State of Wyoming.

In addition, unnecessary construction premised upon extrinsic evidence refuting clear statutory language would constitute an invasion of the legislative powers also described in our constitution. The legislature is entitled to the presumption that its words will be understood and obeyed, and the language incorporated in the statute is the method employed to convey its mandates. A rule that would infringe upon that concept, such as the rule of acquiescence invoked here, is inappropriate, and the method of construction is to be resorted to only when the words of the statute are sufficiently unclear or ambiguous as to obscure the legislative intent.

In summary, we agree with the district court that the relevant statute should be applied exactly as it is written. There was a taxable sale. In so holding, we also agree that sales taxes were appropriately assessed on transactions such as that occurring in this case as of the time of the transaction. This rule fits with our general presumption favoring tax statutes and strictly limiting exemptions. State Board of Equalization v. Wyoming Automobile Dealers Association, 395 P.2d 741 (Wyo.1964). The assessment of the tax, however, is tied to the consideration that is paid, and it is inappropriate to value that consideration by reference to the value of the property sold. In this instance, the record does not afford any basis for establishing any value for the stock used to purchase the assets other than a nominal one, and the record does not establish what that nominal value was. Consequently, while there was a taxable sale, no tax is due because the record fails to establish the amount paid for the assets acquired.

The analysis and resolution of the issues set forth above make it inappropriate and unnecessary to consider Allied-Signal’s concerns with respect to alleged violations of the Wyoming Administrative Procedure Act and the state and federal constitutions.

The judgment of the district court and the decision of the State Board of Equalization are reversed.

URBIGKIT, C.J., files a specially concurring opinion.