Apple Argued That Buildings at Its Headquarters Were Worth $200, Not $1B, To Reduce Its Tax Bill: Report (sfchronicle.com)

Apple argued that buildings it owned around Cupertino, where it is headquartered, were only worth $200 instead of the $1 billion tax assessors deemed in 2015, according to appeals reviewed by the San Francisco Chronicle. From a report: The report characterized the dispute as part of an aggressive strategy by Apple to lower its tax bills. According to the Chronicle, Apple has 489 open appeals in tax disputes over property assessed at $8.5 billion in Santa Clara County, Calif., dating back to 2004. Those appeals include the $1 billion building assessed by tax officials, as well as another $384 million property that Apple also claims is worth $200. Apple is now valued at $1 trillion. It is also the county's biggest taxpayer, paying $56 million in the 2017-2018 tax year.

Comments

Sounds good to me

[rsilvergun]

Apple is clearly making very poor use of the land this lowering it's value to catastrophic levels. I say San Francisco used Eminent domain to take the land and put it to good use (perhaps for public housing). The city will, of course, compensate Apple for the full, fair market value of $200. Heck, I say pay them twice that, an almost unheard of $400 dollars, to cover the expanse of obtaining a new headquarters. I mean, when you put it like that it's a win win

Lie on taxes

[nitehawk214]

If an individual lies on taxes, they go to jail.

If a corporation lies on taxes, they get rewarded.

Re:$250

[azadrozny]

It would be funny to have the local municipality come in and take the property though eminent domain using Apple's valuation. I am sure the county or state could use the extra office space.

How are they depreciating it?

[Solandri]

Commercial buildings are depreciated over 39 years. That is, the building's construction cost is a business expense, and thus tax deductible (you don't pay tax on the money you spent on expenses). But because it's a purchase that's used for so long, you're not allowed to deduct the whole thing in a single year. Instead, you take the building's construction cost, and divide it (depreciate it) over 39 years, and use that as your annual tax deduction.

If Apple says the building is only worth $200, then their tax deduction for building depreciation over the next 39 years can only be a maximum of $5.13 per year. So either they pay the property tax on a $1 billion building (which at Prop 13's 1% cap and utilities of about 1% works out to about $20 million/yr in taxes), or they lose an annual tax deduction of ($1 billion) / (39 years) = $25.6 million (which at the 35% corporate tax rate would be $8.96 million/yr).

I suspect what's going on is some accountant did this math and decided it would be cheaper to give up building depreciation in exchange for a lower tax assessment. But now their gig has been discovered and they're at risk of both losing the building depreciation tax deduction, while having it assessed at its full value for property taxes. If that's not what they're doing, and they're audaciously depreciating the building by $25.6 million on this year's taxes while simultaneously claiming it's only worth $200 for property tax assessment, then this is simple. They've legally admitted to the IRS that the building is worth $1 billion. Claiming to the assessor that it's only worth $200 constitutes fraud and possibly perjury.