{ "id": 12123197, "name": "IN THE MATTER OF: THE APPEAL OF R. W. MOORE EQUIPMENT COMPANY, INC., FROM THE DISCOVERY OF CERTAIN PERSONAL PROPERTY BY WAKE COUNTY FOR 1988, 1989, 1990, AND 1991", "name_abbreviation": "In re the Appeal of R. W. Moore Equipment Co.", "decision_date": "1994-06-07", "docket_number": "No. 9310PTC959", "first_page": "129", "last_page": "133", "citations": [ { "type": "official", "cite": "115 N.C. App. 129" } ], "court": { "name_abbreviation": "N.C. Ct. App.", "id": 14983, "name": "North Carolina Court of Appeals" }, "jurisdiction": { "id": 5, "name_long": "North Carolina", "name": "N.C." }, "cites_to": [ { "cite": "281 S.E.2d 391", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1981, "opinion_index": 0 }, { "cite": "303 N.C. 544", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8574372, 8574312, 8574353, 8574295, 8574328 ], "year": 1981, "opinion_index": 0, "case_paths": [ "/nc/303/0544-05", "/nc/303/0544-02", "/nc/303/0544-04", "/nc/303/0544-01", "/nc/303/0544-03" ] }, { "cite": "277 S.E.2d 91", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1981, "opinion_index": 0 }, { "cite": "51 N.C. App. 516", "category": "reporters:state", "reporter": "N.C. App.", "case_ids": [ 2644938 ], "year": 1981, "opinion_index": 0, "case_paths": [ "/nc-app/51/0516-01" ] }, { "cite": "68 S.E.2d 433", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1951, "opinion_index": 0 }, { "cite": "234 N.C. 572", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8624770 ], "year": 1951, "opinion_index": 0, "case_paths": [ "/nc/234/0572-01" ] }, { "cite": "250 S.E.2d 236", "category": "reporters:state_regional", "reporter": "S.E.2d", "year": 1979, "opinion_index": 0 }, { "cite": "296 N.C. 330", "category": "reporters:state", "reporter": "N.C.", "case_ids": [ 8565980 ], "year": 1979, "opinion_index": 0, "case_paths": [ "/nc/296/0330-01" ] } ], "analysis": { "cardinality": 504, "char_count": 11162, "ocr_confidence": 0.765, "pagerank": { "raw": 2.7088264395012126e-07, "percentile": 0.8291363704988206 }, "sha256": "e7720fc4ea0e3d77488ac1c610692913c390b9d5b1adf8b0760e975872158c2b", "simhash": "1:cc51dd6a6a07bea8", "word_count": 1762 }, "last_updated": "2023-07-14T22:58:18.676868+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [ "Judges WELLS and JOHN concur." ], "parties": [ "IN THE MATTER OF: THE APPEAL OF R. W. MOORE EQUIPMENT COMPANY, INC., FROM THE DISCOVERY OF CERTAIN PERSONAL PROPERTY BY WAKE COUNTY FOR 1988, 1989, 1990, AND 1991" ], "opinions": [ { "text": "JOHNSON, Judge.\nThe facts of this appeal are as follows: Taxpayer, R. W. Moore Equipment Company, Inc. (hereafter, Taxpayer), is challenging the denial of tax exclusions for certain items of heavy equipment rented to third parties during the tax years 1988 to 1991.\nTaxpayer is a wholesaler and retailer of new and used John Deere heavy equipment. In addition to selling John Deere equipment, Taxpayer also rents equipment under week to week or month to month rental agreements. All of Taxpayer\u2019s rental agreements provide that Taxpayer may withdraw the equipment from the renter at any time and sell it to another party. It is estimated that Taxpayer exercises this contractual right approximately 3 to 6 times per year.\nIn October of 1991, the Wake County Assessor (hereafter, Assessor), pursuant to North Carolina General Statutes \u00a7 105-312(c) (1992), issued a notice of discovery of personal property taxes for the tax years 1987 through 1991 to Taxpayer. The notice stated that the Assessor had determined that Taxpayer was liable for property taxes on \u201cRental Equipment\u201d discovered by the County. On 18 November 1991, Taxpayer filed written exception to the discovery of the property. A hearing on the matter was held before the Wake County Tax Committee, acting by appointment of the Wake County Commissioners. By letter dated 6 February 1992, the Wake County Board of Commissioners affirmed the discovery. On 27 February 1992, Taxpayer timely appealed the discovery to the North Carolina Property Tax Commission (hereafter, the Commission). The Commission heard the matter on stipulated facts, documentary evidence and testimony and issued a decision dated 5 April 1993 affirming the County\u2019s decision as to the taxability of Taxpayer\u2019s property. From the decision of the Commission, Taxpayer appealed to our Court.\nBy Taxpayer\u2019s first assignment of error, Taxpayer contends that the Commission erred in holding, as a matter of law, that Taxpayer\u2019s property does not constitute goods held for sale while rented to third parties.\nThe scope of appellate review of cases from the Commission is set out by North Carolina General Statutes \u00a7 105-345.2(1992), which in pertinent part provides:\n(a) On appeal the court shall review the record and the exceptions and assignments of error in accordance with the rules of appellate procedure, and any alleged irregularities in procedures before the Property Tax Commission, not shown in the record, shall be considered under the rules of appellate procedure.\n(b) So far as necessary to the decision and where presented, the court shall decide all relevant questions of law, interpret constitutional and statutory provisions, and determine the meaning and applicability of the terms of any Commission action. The court may affirm or reverse the decision of the Commission, declare the same null and void, or remand the case for further proceedings!.] \u2022 \u2022 \u2022\nIn applying this \u201cwhole record test\u201d to determine whether the record fully supports the Commission\u2019s decision, this Court must evaluate whether the Commission\u2019s decision is supported by substantial, competent and material evidence. Where the Commission\u2019s findings are supported by such evidence, they are binding on appeal. In re Forestry Foundation, 296 N.C. 330, 250 S.E.2d 236 (1979).\nNorth Carolina General Statutes \u00a7 105-274(1992) provides that all property located within North Carolina, both real and personal, is subject to taxation unless expressly excluded or exempt from taxation by a statutory or constitutional provision. North Carolina General Statutes \u00a7 105-275(34) (1992) expressly excludes from taxation, \u201c[inventories owned by retail and wholesale merchants.\u201d \u201cInventories\u201d is defined by North Carolina General Statutes \u00a7 105-273(8a) (1992) as \u201cgoods held for sale in the regular course of business by manufacturers, retail and wholesale merchants, and contractors!.] . . .\u201d\nTaxpayer contends that the property in question does not lose its exemption status merely because it is rented to third parties because Taxpayer retains the right to sell the property to another party. Taxpayer argues that the relevant statute only requires that Taxpayer\u2019s equipment be held for sale in the regular course of business. Therefore, because the equipment in question was held primarily for the purpose of sale and marketed for sale, even while being rented, the equipment was held for sale within the meaning of North Carolina General Statutes \u00a7 105-273(8a) and exempt from taxation. We disagree for two reasons.\nWe disagree, first, because of the language in the relevant statute. North Carolina General Statutes \u00a7 105-273(8a) requires that the \u201cgoods be held for sale by manufacturers, retail and wholesale merchants, and contractors^] . . .\u201d (Emphasis added.) The term \u201cheld\u201d has not been defined by statute or judicial decision; therefore, we look to its natural, approved and recognized meaning. Cab Co. v. Charlotte, 234 N.C. 572, 68 S.E.2d 433 (1951). Webster\u2019s Third New International Dictionary primarily defines \u201chold\u201d as: \u201cto retain in one\u2019s keeping or maintain possession of.\u201d Webster\u2019s Third New International Dictionary 1078 (3rd ed. 1966).\nUtilizing this definition, we find that the equipment in question was not \u201cheld\u201d by Taxpayer, but rather the lessee of the equipment. While Taxpayer argues that it \u201cheld\u201d the equipment because it retained the right to repossess the equipment and sell it to another at any time, the equipment was in the lessee\u2019s possession until Taxpayer exercised its right to repossess the equipment. Additionally, Taxpayer\u2019s power to sell the leased equipment to others is limited by Taxpayer giving the present renter the option to purchase the equipment prior to the equipment being sold to a third party. As such, we cannot find that the equipment in question was \u201cheld\u201d by Taxpayer when rented to third parties.\nWe disagree secondly, because of the previous holdings of this Court that it is the use to which the property is dedicated, rather than the nature or characteristics of the owning entity which ultimately determines the property\u2019s exemption status. In re Wake Forest University, 51 N.C. App. 516, 277 S.E.2d 91, disc. review denied, 303 N.C. 544, 281 S.E.2d 391 (1981). (Citations omitted.) While Taxpayer contends that it holds all its equipment for the purpose of sale, the evidence shows that the equipment of Taxpayer in question is primarily used for rental purposes. We, therefore, agree with the Commission that Taxpayer, by renting the equipment to third parties, is not entitled to the inventory tax exclusion for the rented equipment.\nBy Taxpayer\u2019s second assignment of error, Taxpayer contends that the Commission erred in failing to hold that in order to qualify for the inventory exclusion, Taxpayer need not exclusively hold the property for sale.\nTaxpayer argues that implicit in the Commission\u2019s decision to tax the property in question is the assumption that while Taxpayer\u2019s equipment is being rented, it cannot be held for sale and thus cannot qualify as nontaxable inventory. In essence, Taxpayer contends the Commission has placed an exclusive use requirement in the statute.\nWe agree with the Commission that Taxpayer\u2019s use of the property in question disqualifies the property from exemption. The record reflects that defendant treats the equipment as income producing property rather than inventory for financial reporting purposes, depreciating only that part of its inventory of new and used equipment that it uses for rental purposes. We, therefore, agree with the Commission\u2019s finding that this treatment renders the equipment used for rental purposes ineligible for tax exclusion because its use and consumption as income producing property is incompatible with its character as inventory. The Commission merely recognized that allowing inventory to be used for income producing purposes would be inconsistent with the general definition of inventory as defined by North Carolina General Statutes \u00a7 105-273(8a); the Commission did not find that the equipment in question needs to be exclusively held for sale. However, we do not believe the Commission erred in not holding that in order to qualify for the inventory exclusion, Taxpayer need not exclusively hold the property for sale.\nBy Taxpayer\u2019s final assignment of error, Taxpayer contends that the Commission erred in comparing the tax treatment of Taxpayer to the property tax treatment of equipment leasing companies such as Hertz Equipment Rental Corporation and Rex Rentals, Inc.\nWe do not find that the Commission erred in comparing Taxpayer to the above named rental companies. In essence, Taxpayer is in direct competition with the rental companies, since Taxpayer does not require that its lessees purchase the equipment. While Taxpayer contends that it should not be compared with such companies because such companies are in the primary business of leasing and Taxpayer is in the primary business of selling, an individual can lease from Taxpayer just as easily as it can from the comparison companies. We do not feel that Taxpayer\u2019s right to repossess the equipment is dispositive. Accordingly, we overrule Taxpayer\u2019s final assignment of error.\nThe decision of the Commission is affirmed.\nJudges WELLS and JOHN concur.", "type": "majority", "author": "JOHNSON, Judge." } ], "attorneys": [ "Poyner and Spruill, by Thomas L. Norris,' Jr. and Thomas H. Cook, Jr. for appellant.", "Wake County Attorney\u2019s Office, by Deputy County Attorney Shelley T. Eason for appellee Wake County." ], "corrections": "", "head_matter": "IN THE MATTER OF: THE APPEAL OF R. W. MOORE EQUIPMENT COMPANY, INC., FROM THE DISCOVERY OF CERTAIN PERSONAL PROPERTY BY WAKE COUNTY FOR 1988, 1989, 1990, AND 1991\nNo. 9310PTC959\n(Filed 7 June 1994)\n1. Taxation \u00a7 65 (NCI4th)\u2014 equipment rented subject to sale \u2014 no tax exempt status\nThere was no merit to taxpayer\u2019s contention that its equipment did not lose its tax exempt status merely because it was rented to third parties because taxpayer retained the right to sell the property to another party, since the language of N.C.G.S. \u00a7 105-273(8a) requires that the goods be held by merchants; the equipment here was not held by taxpayer but by the lessees of the equipment; it is the use to which the property is dedicated, rather than the nature or characteristics of the owning entity, which ultimately determines the property\u2019s exemption status; and the evidence showed that the equipment of taxpayer in question was primarily used for rental purposes.\nAm Jur 2d, State and Local Taxation \u00a7\u00a7 332 et seq.\n2. Taxation \u00a7 66 (NCI4th)\u2014 equipment treated as income producing property and not inventory \u2014 no tax exclusion for rented equipment\nThe North Carolina Property Tax Commission properly found that taxpayer\u2019s treatment of equipment as income producing property rather than inventory rendered the equipment used for rental purposes ineligible for tax exclusion because its use and consumption as income producing property was incompatible with its character as inventory.\nAm Jur 2d, State and Local Taxation \u00a7\u00a7 332 et seq.\nAppeal by R. W. Moore Equipment Company from a Final Decision of the North Carolina Property Tax Commission entered 5 April 1993. Heard in the Court of Appeals 11 May 1994.\nPoyner and Spruill, by Thomas L. Norris,' Jr. and Thomas H. Cook, Jr. for appellant.\nWake County Attorney\u2019s Office, by Deputy County Attorney Shelley T. Eason for appellee Wake County." }, "file_name": "0129-01", "first_page_order": 161, "last_page_order": 165 }