{ "id": 2762210, "name": "DONA ANA DEVELOPMENT CORPORATION, a New Mexico corporation, Appellant, v. COMMISSIONER OF REVENUE of the State of New Mexico, Appellee", "name_abbreviation": "Dona Ana Development Corp. v. Commissioner of Revenue", "decision_date": "1973-02-02", "docket_number": "No. 971", "first_page": "641", "last_page": "646", "citations": [ { "type": "official", "cite": "84 N.M. 641" }, { "type": "parallel", "cite": "506 P.2d 798" } ], "court": { "name_abbreviation": "N.M. Ct. App.", "id": 9025, "name": "Court of Appeals of New Mexico" }, "jurisdiction": { "id": 52, "name_long": "New Mexico", "name": "N.M." }, "cites_to": [ { "cite": "82 N.M. 405", "category": "reporters:state", "reporter": "N.M.", "case_ids": [ 5329456 ], "weight": 2, "year": 1971, "opinion_index": 0, "case_paths": [ "/nm/82/0405-01" ] }, { "cite": "81 N.M. 481", "category": "reporters:state", "reporter": "N.M.", "case_ids": [ 5365414 ], "weight": 2, "opinion_index": 0, "case_paths": [ "/nm/81/0481-01" ] }, { "cite": "83 N.M. 743", "category": "reporters:state", "reporter": "N.M.", "case_ids": [ 5337469 ], "weight": 2, "year": 1972, "opinion_index": 0, "case_paths": [ "/nm/83/0743-01" ] }, { "cite": "83 N.M. 29", "category": "reporters:state", "reporter": "N.M.", "case_ids": [ 5338277 ], "weight": 2, "opinion_index": 0, "case_paths": [ "/nm/83/0029-01" ] }, { "cite": "4 N.W.2d 405", "category": "reporters:state_regional", "reporter": "N.W.2d", "year": 1942, "opinion_index": 0 }, { "cite": "232 Iowa 58", "category": "reporters:state", "reporter": "Iowa", "case_ids": [ 8642885 ], "year": 1942, "opinion_index": 0, "case_paths": [ "/iowa/232/0058-01" ] }, { "cite": "189 N.E. 885", "category": "reporters:state_regional", "reporter": "N.E.", "year": 1934, "opinion_index": 0 }, { "cite": "355 Ill. 633", "category": "reporters:state", "reporter": "Ill.", "case_ids": [ 5285303 ], "year": 1934, "opinion_index": 0, "case_paths": [ "/ill/355/0633-01" ] }, { "cite": "358 P.2d 539", "category": "reporters:state_regional", "reporter": "P.2d", "year": 1961, "opinion_index": 0 }, { "cite": "44 Haw. 584", "category": "reporters:state", "reporter": "Haw.", "case_ids": [ 1441574 ], "year": 1961, "opinion_index": 0, "case_paths": [ "/haw/44/0584-01" ] }, { "cite": "48 N.M. 395", "category": "reporters:state", "reporter": "N.M.", "case_ids": [ 1560827 ], "weight": 2, "year": 1944, "opinion_index": 0, "case_paths": [ "/nm/48/0395-01" ] }, { "cite": "75 N.M. 321", "category": "reporters:state", "reporter": "N.M.", "case_ids": [ 5377494 ], "weight": 2, "year": 1965, "opinion_index": 0, "case_paths": [ "/nm/75/0321-01" ] }, { "cite": "84 N.M. 524", "category": "reporters:state", "reporter": "N.M.", "case_ids": [ 2766340 ], "weight": 2, "opinion_index": 0, "case_paths": [ "/nm/84/0524-01" ] }, { "cite": "312 U.S. 552", "category": "reporters:federal", "reporter": "U.S.", "case_ids": [ 359248 ], "weight": 3, "year": 1941, "opinion_index": 0, "case_paths": [ "/us/312/0552-01" ] }, { "cite": "79 N.M. 332", "category": "reporters:state", "reporter": "N.M.", "case_ids": [ 2738847 ], "weight": 2, "opinion_index": 0, "case_paths": [ "/nm/79/0332-01" ] } ], "analysis": { "cardinality": 646, "char_count": 15537, "ocr_confidence": 0.644, "pagerank": { "raw": 9.320052401680558e-08, "percentile": 0.5131862900115026 }, "sha256": "867c36ee0b4265e99cd3cef2e7bb36275ed2b6dfc54581b4931262e1645e6785", "simhash": "1:94c638034ae9ea98", "word_count": 2499 }, "last_updated": "2023-07-14T17:55:55.751115+00:00", "provenance": { "date_added": "2019-08-29", "source": "Harvard", "batch": "2018" }, "casebody": { "judges": [ "HENDLEY and LOPEZ, JJ., concur." ], "parties": [ "DONA ANA DEVELOPMENT CORPORATION, a New Mexico corporation, Appellant, v. COMMISSIONER OF REVENUE of the State of New Mexico, Appellee." ], "opinions": [ { "text": "OPINION\nWOOD, Chief Judge.\nThe basic question is the applicability of the gross receipts and municipal tax to the construction and sale of residential property. A related question involves the hearing held in connection with the asserted tax liability and the form of the Decision and Order of the Commissioner of Revenue. We discuss seven items: (1) form of the Decision and Order; (2) applicability of a ruling; (3) asserted change of position on appeal; (4) valuation of land; (5) the deduction provided by \u00a7 72-16A-14(F), N.M.S.A.1953 (Int.Supp. 1966) being Laws 1966, ch. 47, \u00a7 14(F) (not changed by Laws 1967, ch. 307, \u00a7 1), repealed by Laws 1969, ch. 144, \u00a7 35; (6) applicability of \u00a7 72-16A-14(F), supra; and (7) applicability of \u00a7 72-16A-14.8, N.M.S.A.1953 (Repl.Vol. 10, pt. 2, Supp. 1971).\nDuring the material time, Dona Ana (Dona Ana Development Company) constructed and sold residential property. The construction was on land which had been acquired and prepared for development by Dona Ana.\nThe Bureau of Revenue, after an audit, issued its notice of assessment of taxes. Dona Ana protested a portion of the assessment. The protest went to liability for gross receipts tax, municipal tax, penalty and interest. A formal hearing was held at which evidence was presented concerning eight of Dona Ana\u2019s transactions. The protest was denied. Dona Ana\u2019s appeal to this court [\u00a7 72-13-39, N.M.S.A.1953 (Repl.Vol. 10, pt. 2, Supp.1971)] involves each of the eight transactions. We identify the transactions by the name of the purchaser involved.\nThe Commissioner concedes that assessment of tax liability on the basis of the Hubbard transaction was erroneous. Accordingly, the Commissioner\u2019s Decision and Order denying the protest in connection with the Hubbard transaction is reversed.\nForm of the Decision and Order.\nThe Decision and Order states: \u201cIn entering this Decision and Order, the Commissioner of Revenue has relied upon the relevant rulings and regulations issued by the Bureau of Revenue.\u201d Appeals to this court \u201c * * * shall be upon the record made at the hearing. * * * \u201d Section 72-13-39, supra. At the hearing, reference was made to Ruling 69-150-1 dated April 2, 1969, and to Regulation 14.-8-1. Whatever \u201crelevant\u201d rulings and regulations exist, our . review of rulings and regulations does not go beyond the one ruling and one regulation identified in the record made at the hearing.\nApplicability of a ruling.\nAt the hearing, both parties relied on the \u201cruling\u201d identified above. Section 72-13-23, N.M.S.A.1953 (Repl.Vol. 10, pt. 2, Supp.1971) defines \u201crulings\u201d as \u201c * * * written statements of the commissioner, of limited application to one or a small number of taxpayers. * * * \u201d Section 72-13-73, N.M.S.A.1953 (Repl.Vol. 10, pt. 2, Supp.1971) provides that the Commissioner \u201c * * * shall be estopped from obtaining or withholding the relief requested if it is shown by the party adverse to the commissioner that his action or inaction complained of was in accordance * * * with any ruling addressed to him personally and in writing by the commissioner. * * * \u201d\nThe \u201cruling,\u201d a copy of which is an exhibit in this case, is not addressed to the taxpayer personally, it is not addressed to anyone. There is nothing showing the \u201cruling\u201d to be of \u201c * * * limited application to one or a small number of taxpayers. * * * \u201d\nBecause of the provisions of \u00a7\u00a7 72-13-23 and 72-13-73, supra, there is no basis in fact for the application of \u201cruling\u201d 69-150-1 and it is not considered further herein.\nAsserted change of position on appeal.\nSix of the transactions involved have material dates that involve the deduction authorized by \u00a7 72-16A \u2014 14(F), supra. In arguing that this deduction is inapplicable, the Commissioner, in this court, asserts that the transactions were taxable because they were contracts for construction under \u00a7 72-16A-3(C), N.M.S.A.1953 (1966 Int. Supp.) [which has been subsequently amended], and, therefore, subject to the tax imposed by \u00a7 72-16A-4, N.M.S.A.1953 (1966 Int.Supp.) [also subsequently amended].\nDona Ana asserts that the argument as to the taxability of contracts for construction is a theory not relied on at the hearing before the Commissioner and this court should not allow the Commissioner to shift his theories at the appellate level. Board of Education v. State Board of Education, 79 N.M. 332, 443 P.2d 502 (Ct.App.1968) states that a party will not be permitted to raise, on appeal, issues that were not raised in the administrative proceedings. We need not consider whether this rule applies in tax cases. See Hormel v. Helvering, 312 U.S. 552, 61 S.Ct. 719, 85 L.Ed. 1037 (1941).\nTaxpayer, in its opening statement at the administrative hearing, states: \u201c * * * the question is how the tax on construction contracting should be applied to basically the home-building area. * * * \u201d This issue was argued at the close of the hearing. The Commissioner\u2019s argument in this court does not differ from the theory presented at the hearing.\nValuation of land.\nIn determining the applicability of \u00a7\u00a7 72-16A-14(F) and 72-16A-14.8, supra, to the transactions involved, the audit report and the tax assessment resulting from the audit, segregated land value from the value of the improvements constructed. The tax assessed was based only on the improvements constructed.\nEvidence introduced without objection at the hearing, and which is uncontradicted, is that the land valuation assigned by the auditor to the McNeil, Boudreau and Roberge transactions was too low. There is no testimony supporting the land valuations assigned by the auditor. There is evidence that the sale price to Boudreau was less than the total cost of the land and the cost of constructing the improvements. For each of the three transactions, the tax assessment was on the basis of the total cost of construction and without regard to the sales price. Thus, any loss on the transaction was assigned to land value. In denying Dona Ana\u2019s protest, the Commissioner has necessarily upheld the auditor\u2019s allocation of value to land and to the improvements. The only justification appearing in the record for this allocation is Regulation 14.8-1, which appears to support this allocation of value.\nAt the hearing, Dona Ana asserted the regulation was invalid to the extent it required the total cost of improvements be taxed without regard to the actual sales price, since it required any loss to be attributed to land value. We do not decide the validity of the regulation since the validity of the regulation is not a point relied on for reversal and the issue has not been briefed. See Sierra Blanca Sales Company, Inc. v. Newco Industries, Inc., (Ct.App.), 84 N.M. 524, 505 P.2d 867, decided November 3, 1972.\nDeduction provided by \u00a7 72-16A-14(F), supra.\nSection 72-16A-14(F), supra, states in part: \u201cReceipts from the sale of * * * real property * * * may be deducted from gross receipts.\u201d\nSix of the transactions are involved under this point \u2014 Gress, Ikard, McNeil, Thum, Boudreau and Fields. The Commissioner specifically ruled out a deduction for the five first named, but did not specifically mention the Fields transaction. Since Dona Ana\u2019s protest was totally denied, the Commissioner\u2019s Decision necessarily denied Dona Ana\u2019s protest based on the Fields transaction. Thus, we consider all six.\nNo question is presented as to the nature of the improvements constructed. The improvements, when completed, became a part of the real estate. See Garrison General Tire Service, Inc. v. Montgomery, 75 N.M. 321, 404 P.2d 143 (1965); Taylor v. Shaw, 48 N.M. 395, 151 P.2d 743 (1944).\nHere, however, a contract was entered for each of the transactions. Most of the six contracts expressly refer to the house or other improvements to be constructed. A fair inference from the other contracts is that improvements were to be constructed pursuant to the contract. Thus, in each of the six transactions involved in this point there was no sale of completed improvements, but a contract for sale of improvements not yet completed.\nThe tax assessment is based on receipts attributable to the construction contracts. The construction contracts, on the date they were entered by the purchaser, were executory to the extent the improvements had not been completed. In re Kobayashi, 44 Haw. 584, 358 P.2d 539 (1961). To the extent the contracts were executory, the improvements had not become a part of the real estate. To this extent, the receipts attributable to the construction contracts were not receipts from the sale of real property and to this extent the deduction provided in \u00a7 72-16A-14(F), supra, was not applicable.\nDona Ana\u2019s arguments in favor of the deduction are directed to the provisions of Ruling 69-150-1, which we have held inapplicable. Thus, Dona Ana points out that although it had entered contracts of sale, it had not enforced them against defaulting purchasers. Dona Ana shows that it provided the interim financing for the improvements, retained title until completion of the improvements, and paid the real property taxes until the transaction was closed. Dona Ana points out that in each instance the down payment received was less than the value of the land without improvements. None of these facts suffice to establish that improvements, not yet constructed, were a part of the real estate on the dates of the six contracts of sale.\nThe deduction provided by \u00a7 72-16A-14(F), supra, is a deduction for receipts derived from the sale of real property. Unconstructed improvements are not part of the real estate. Receipts attributable to those unconstructed improvements are receipts from a contract (\u00a7 72-16A-3(C), supra) and were taxable under \u00a7 72-16A-4, supra.\nApplicability of \u00a7 72-16A-14(F), supra.\nThis point considers the correctness of the Commissioner\u2019s ruling in relation to \u00a7 72-16A-14(F), supra. Specifically, we apply the law discussed in the preceding point to the facts of this case.\nIn denying the protests, the Commissioner approved the tax assessment based on the costs of the improvements without regard to any improvements constructed prior to the contract date. Receipts attributable to improvements which had become a part of the real estate prior to the contract date would be receipts from the sale of real estate and deductible under \u00a7 72-16A-14(F), supra. See People v. Marshall Field & Co., 355 Ill. 633, 189 N.E. 885 (1934); Wagner v. Board of Review of City of Glenwood, 232 Iowa 58, 4 N.W.2d 405 (1942).\nThe evidence is undisputed that the improvements referred to in the Gress contract were substantially completed prior to the date of that contract. The evidence is undisputed that certain preparatory work had been done on the land included in the Thum contract before the contract was signed. The evidence is undisputed that each of the six contracts involved land that had been planned and platted, and that streets and utilities had been put into these planned subdivisions prior to the contract date. Which, if any, of these items may be considered as real property prior to the date of the six contracts is a question of fact. This factual question was not resolved as to any of the six contracts since the Commissioner denied the protest without regard to improvements constructed prior to the contract date. Accordingly, the Commissioner\u2019s Decision and Order as to these six contracts is vacated and the cause remanded for a determination of the cost of improvements which had become a part of the real estate prior to the date of the construction contracts. See Westland Corporation v. Commissioner of Revenue, 83 N.M. 29, 487 P.2d 1099 (Ct.App.1971).\nApplicability of \u00a7 72-16A-14.8, supra.\n? pertinent part of \u00a7 72-16A-14.-8, supra, reads: \u201cReceipts from the sale * * * of real property * * * may be deducted from gross receipts. However, that portion of the receipts from the sale of real property which is attributable to improvements constructed on the real property by the seller in the ordinary course of his construction business may not be deducted from gross receipts.\u201d Section 72-16A-14.8, supra, was enacted by Laws 1969, ch. 144, which also repealed the prior deduction, \u00a7 72-16A-14(F), supra.\nOne transaction\u2014Roberge\u2014is involved in this point. The improvements involved were constructed on land owned by Dona Ana without any contract of sale. The construction was completed in September, 1968. If a sale had occurred prior to the effective date of \u00a7 72-16A-14.8, supra, the receipts for sale of the land and improvements would have been deductible under \u00a7 72-16A-14(F), supra. However, this did not occur. The sale to Roberge occurred in October or November, 1969, after the effective date of \u00a7 72-16A-14.8, supra.\nOn the above facts, Dona Ana contends \u00a7 72-16A-14.8, supra, does not apply. Its view is that \u00a7 72-16A-14.8, supra, applies only where both the improvements were constructed and the sale occurred after the effective date of that section. It argues that its view should be given effect because the statute is ambiguous and because its view reasonably represents the legislative intent.\nWe disagree. There is no claim that the improvements were not constructed in the ordinary course of Dona Ana\u2019s construction business. Section 72-16A-14.8, supra, provides a deduction for receipts from a sale of real property and states that receipts from the sale attributable to improvements may not be deducted. The deduction and the limitation on the deduction are plainly stated in reference to a sale; neither the deduction nor the limitation on the deduction refer to the date of construction.\nLegislative intent is determined primarily by the language of the act. Till v. Jones, 83 N.M. 743, 497 P.2d 745 (Ct.App. 1972); Reed v. Jones, 81 N.M. 481, 468 P.2d 882 (Ct.App.1970). Where the terms of the statute are plain and unambiguous there is no room for construction. Southern Union Gas Co. v. New Mexico Pub. Serv. Com\u2019n, 82 N.M. 405, 482 P.2d 913 (1971). Here, there is no ambiguity in the wording of \u00a7 72-16A-14.8, supra, and the language of that section shows a legislative intent not to allow a deduction on receipts from the sale of real property attributable to improvements constructed on the real property.\nBy the terms of \u00a7 72-16A-14.8, supra, Dona Ana was not entitled to a deduction on receipts from the Roberge sale which were attributable to improvements constructed on the land involved. The Commissioner correctly denied the protest directed to the portion of the tax assessment based on the Roberge transaction.\nIn summary\u2014we reverse the Commissioner\u2019s decision which upheld the portion of the tax assessment attributable to the Hubbard transaction. We affirm the Commissioner\u2019s decision which upheld the portion of the tax assessment attributable to the Roberge transaction. We vacate the Commissioner\u2019s decision concerning the portion of the tax assessment attributable to the Gress, Ikard, McNeil, Thum, Boudreau and Fields transactions. As to those six transactions, we remand the cause to the Commissioner for further proceedings consistent with this opinion.\nIt is so ordered.\nHENDLEY and LOPEZ, JJ., concur.", "type": "majority", "author": "WOOD, Chief Judge." } ], "attorneys": [ "Norman S. Thayer, Jr., Sutin, Thayer & Browne, Albuquerque, for appellant.", "David L. Norvell, Atty. Gen., James D. Bryce, Susan P. Graber, Agency Asst. Attys. Gen., Santa Fe, for appellee." ], "corrections": "", "head_matter": "506 P.2d 798\nDONA ANA DEVELOPMENT CORPORATION, a New Mexico corporation, Appellant, v. COMMISSIONER OF REVENUE of the State of New Mexico, Appellee.\nNo. 971.\nCourt of Appeals of New Mexico.\nFeb. 2, 1973.\nNorman S. Thayer, Jr., Sutin, Thayer & Browne, Albuquerque, for appellant.\nDavid L. Norvell, Atty. Gen., James D. Bryce, Susan P. Graber, Agency Asst. Attys. Gen., Santa Fe, for appellee." }, "file_name": "0641-01", "first_page_order": 797, "last_page_order": 802 }