Nev. Admin. Code § 361.454 — 361.454

NAC 361.454    Income approach indicator of value: Formula for determination. ( NRS 360.090 , 361.320 )
1.  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.
[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)