Section 361.454 - Income approach indicator of value: Formula for determination1. The capitalized income approach consists of deducting from the normalized and annualized gross operating income any direct and indirect normalized and annualized operating expenses specifically related to the normalized and annualized gross operating income, including, without limitation, any annualized book depreciation. Deferred income taxes will be treated as an operating expense. Normalized and annualized rental expense on operating property leased from others, less imputed depreciation, income taxes and other applicable expenses, will be disallowed as an operating expense.2. The resulting adjusted net operating income will be capitalized (converted to value) using an appropriate capitalization rate for the airline industry group. The capitalization rate for the typical company will be used for the carriers being appraised in each airline industry group. The market capitalization rate will be derived from calculations made for selected carriers in each airline industry group.3. The operating income to be capitalized into taxable value will be normalized and annualized based on the most recent year's adjusted net operating income. When the most recent year's net operating income is typically not a reasonable representation of the net operating income of an airline, such as where the net operating income of the airline tends to be cyclical, a 3- or 5-year average of adjusted net operating incomes will be normalized and annualized and may be used.4. The net operating income may be capitalized before deducting any book depreciation or income tax if the normalized and annualized net operating income results in a negative amount. If any book depreciation or income tax is added to the net operating income before the net operating income is capitalized, the capitalization rate must include a component for that book depreciation or income tax.5. Any normalization or annualization adjustments to the net operating income of a carrier must be based on known, measurable and experienced changes in the operation or taxable property of the carrier as of the current year's reporting date.Nev. Admin. Code § 361.454
Tax Comm'n, Property Tax Reg. part No. 15D, eff. 10-30-79; A 10-15-81-NAC A 9-30-88; R026-99, 1-27-2000