Experts urge Board of Equalization to update forms and issue clearer guidance on intangible asset assessments

At a State Board of Equalization working group on intangible asset assessment, taxpayer representatives, attorneys and credentialed appraisers urged the board to update reporting forms and issue clearer, statewide guidance so assessors and appeals boards treat intangibles consistently.

James D. Pasquali, chair and president of the California Alliance of Taxpayer Advocates and principal of De Pasquali Kelling Company, told the board the core problem is inconsistent practice and weak front‑end information. "The intent behind it is not to lay blame. This is an open discussion about what we can do to improve the transparency, the accountability and the uniformity when it comes to valuation of taxable property," Pasquali said, and recommended that standard transfer and reporting forms (preliminary change of ownership reports/PCOR, change‑of‑ownership statements/COS, and 441D questionnaires) include a dedicated section asking whether intangibles are present.

Legal counsel Chris O'Neal, senior shareholder at Greenberg Traurig, urged the board to publish a guidance letter or LTA to supplement — not replace — Assessor's Handbook 502. O'Neal said the board can reduce divergent interpretations by AABs and assessors by crystallizing case law and offering methods to value commonly litigated intangibles. "Identify, value, and deduct," he summarized as the controlling methodology derived from California decisions, and he recommended concrete templates for recurring intangibles such as management agreements, franchise agreements, assembled workforce and food & beverage operations.

Mary O'Connor, an appraiser who specializes in business intangibles, told the panel that a simple, property‑tax‑tailored template would make many cases negotiable rather than litigated. "The principles of appraisal never change," O'Connor said, recommending standardized valuation templates that pair a real‑estate appraiser's pro forma with a business intangibles specialist so assumptions and market parameters are shared.

Several appraisers urged the board to retain and supplement AH 502 rather than rewrite it. Panelists said AH 502 already contains useful valuation direction and case summaries that assessment appeals boards rely on; supplementing that handbook with an LTA and training modules would be quicker and less disruptive than wholesale revision.

Speakers also flagged other recurring issues that the board could address: inconsistent use of the income, cost and sales approaches across counties, limited assessor resources for complex appraisals, unclear treatment of net working capital embedded in going‑concern valuations, and growing intangible components in business personal property (for example, embedded software and intellectual property in data centers).

In closing remarks, board members asked staff to circulate written materials, attach respondents' proposed LTAs to the record, and invite written comments. Deputy Controller's staff said the controller's office will circulate minutes and solicit specific handbook and methodological comments ahead of future workgroup meetings.

The board took no formal action during the session; presenters were invited to submit written proposals and the board requested further staff work on a draft guidance approach.