Section 35.01.03.615 - PROPERTY EXEMPT FROM TAXATION - CERTAIN INTANGIBLE PERSONAL PROPERTYSection 63-602L, Idaho Code
01.Definitions. a. Contracts and contract rights are enforceable agreements, which establish mutual rights and responsibilities, and rights created under such agreements. Contracts and contract rights do not include tax credits received by low-income housing properties under Section 42 of the Internal Revenue Code.b. Copyrights rights granted to the author or originator of literary or artistic productions, by which he or she is invested with the sole and exclusive privilege of making, publishing or selling copies for a specified time.c. Custom computer programs means those programs defined in Section 63-3616, Idaho Code.d. Customer lists are proprietary lists containing information about a business enterprise's customers.e. Franchises are special privileges.f. Goodwill is the expectation of continued public patronage of a business. Goodwill is the ability of a business to generate income in excess of a normal rate due to such things as superior managerial skills, superior market position, favorable community and customer reputation and high employee morale.g. Licenses are permissions to do acts, which are not allowed without such permissions.h. Method A is the method by which the value of exempt intangible personal property is excluded from the value of operating property by subtracting the market value of exempt intangible personal property from the market value of the operating property at the system level.i. Method B is the method by which the value of exempt intangible personal property is excluded from the value of operating property by subtracting the market value of exempt intangible personal property from the market value of the operating property at the state level.j. Method C is the method by which the value of exempt intangible personal property is excluded from the value of operating property by using valuation models which value only the non-exempt assets.k. Patents are grants from the government conveying and securing the exclusive right to make, use and sell inventions.l. Rights-of-way which are possessory only and not accompanied by title are easements by which grantees acquire only the rights to pass over or to access for installation or maintenance, without acquiring exclusive use of the rights-of-way.m. Trademarks are marks of authenticity, through which products of particular manufacturers or vendible commodities of particular merchants may be distinguished from those of others.n. Trade secrets are formulas, patterns, compilations, programs, devices, methods, techniques or processes, deriving independent economic values from not being generally known by other persons who can obtain economic values from disclosure or use. Trade secrets are the subjects of efforts that are reasonable to maintain secrecy.02.Tangible Property Value Not Affected by Intangible Personal Property Value. The values of the exempt intangible personal properties will not affect the values of any tangible properties or the value of the attributes of any tangible properties, regardless of the role of the intangible personal properties in the use of the tangible properties. The exempt values will not include any values attributable to availability of a skilled work force, condition of surrounding property, geographic features, location, rights-of-way, accompanied by title, view, zoning, and attributes or characteristics of real properties.03.Operating Property Election, Reporting and Methods. The following apply to operating property for the identification of valuation methods to be used by the Tax Commission, election of Method A, Method B, or Method C by the property owners, reporting by owners and valuation using Method C.a. Identification of valuation methods. When the Tax Commission mails the blank Operators' Statements to the property owners, the Tax Commission will identify proposed changes in valuation methods compared to those relied on in the prior year.b. Election default. In the event of default of the taxpayer to make an election, the Tax Commission will use the method proposed in the notice accompanying the Operator's Statement.c. Election of exclusion method. When submitting the Operator's Statement, the owner has the right to elect the method for exclusion of the values of the exempt intangible personal properties from the operating property value.d. Amending Election. An owner may amend the elected method if written notice is received at least seven (7) business days prior to a hearing under Rule 407 of these rules.e. Reporting. The Tax Commission will consider the value and supporting data provided by the owners. If no supporting intangibles valuation information is provided by the owners, known exempt intangible personal property will be subtracted or will not be included in the value.f. Valuation using Method C. When the owner elects Method C, the Tax Commission will give primary consideration to the cost less depreciation model, without regulatory adjustment, in valuing tangible personal property and non-exempt intangible personal property. Only if this model fails to produce market value of the tangible personal property and nonexempt intangible personal property, will the Tax Commission consider other appropriate valuation models.04.Personal Property Reporting for Locally Assessed Property. The exemption for custom software, contracts and contract rights is claimed by including such property on the owner's personal property declaration form.Idaho Admin. Code r. 35.01.03.615