CHAPTER 361 - PROPERTY TAX

NAC 361.334 “Main track” defined. (NRS 360.090, 361.320) “Main track” means the lines or routes of a railroad, whether on the main line or a branch line, as distinguished from yard track, side track or passing track. [Tax Comm’n, Property Tax Reg. part No. 15, eff. 10-30-79]

NAC 361.336 “Market value” defined. (NRS 360.090, 361.320) “Market value” means the amount in dollars for which a specific item of property could be sold by a willing seller and be bought by a willing buyer, assuming an arm’s length transaction and reasonable exposure to the mark…

NAC 361.338 “Net additions” defined. (NRS 360.090, 361.320) “Net additions” means the gross additions less the retirements and is usually reported in amounts of dollars. [Tax Comm’n, Property Tax Reg. part No. 15, eff. 10-30-79]

NAC 361.340 “Net operating income” defined. (NRS 360.090, 361.320) “Net operating income” means the excess of the revenues of a business enterprise over the expenses of the enterprise, excluding the income from sources other than its regular activities, but before the deduction o…

NAC 361.342 “Normalization accounting” defined. (NRS 360.090, 361.320) “Normalization accounting” means the practice of charging to the current period those expenses related to the current period rather than to the period in which they are actually incurred. A common example is t…

NAC 361.344 “Obsolescence” defined. (NRS 360.090, 361.320) “Obsolescence” means the lessening of value due to causes other than physical causes and may be functional where circumstances internal to the property item render it less desirable or economic where circumstances externa…

NAC 361.346 “Operating expenses” defined. (NRS 360.090, 361.320) “Operating expenses” means the direct expenses incurred in conducting the ordinary major activities of an enterprise, usually excluding nonoperating expenses and income deductions. [Tax Comm’n, Property Tax Reg. par…

NAC 361.348 “Operating revenue” defined; synonymous with “net revenue.” (NRS 360.090, 361.320) “Operating revenue” means the revenue from the operations of the primary business of an enterprise, such as the electric revenues of an electric utility, which is gross sales of goods a…

NAC 361.350 “Original cost” defined. (NRS 360.090, 361.320) “Original cost” means the cost of a property item to the present owner. At times, it is used as an equivalent to the historical cost. [Tax Comm’n, Property Tax Reg. part No. 15, eff. 10-30-79]

NAC 361.352 “Possessory interest” defined. (NRS 360.090, 361.320) “Possessory interest” means a type of ownership or partial ownership of the total fee. In financial terminology it is the portion of the equity in a business enterprise which is expressed in terms of dollars invest…

NAC 361.354 “Prepayments for gas” defined. (NRS 360.090, 361.320) “Prepayments for gas” means payments made for gas which will be delivered in less than 1 year. [Tax Comm’n, Property Tax Reg. part No. 15, eff. 10-30-79]

NAC 361.356 “Present worth” defined; synonymous with “present value.” (NRS 360.090, 361.320) “Present worth” means the value today of something to be received in the future. It is usually calculated by a discounting process that takes into consideration the time and interest conc…

NAC 361.358 “Price-earnings ratio” defined. (NRS 360.090, 361.320) “Price-earnings ratio” means the ratio of the market price per share of the common stock of a specific company to the earnings per share of common stock of that company during a 12-month period. Typically, the rat…

NAC 361.360 “Rate base” defined. (NRS 360.090, 361.320) “Rate base” means the amount in dollars established by a regulatory agency upon which a return is allowed. [Tax Comm’n, Property Tax Reg. part No. 15, eff. 10-30-79]

NAC 361.362 “Rate of capitalization” defined. (NRS 360.090, 361.320) “Rate of capitalization” means the ratio of income to value. Such a rate can vary widely in quality depending upon the elements that are included such as interest, recapture, ad valorem taxes and income taxes. […

NAC 361.364 “Rate of performance” defined. (NRS 360.090, 361.320) “Rate of performance” means the actual income earned compared to an investment in contrast to a rate of return allowed or permitted but not necessarily accomplished. [Tax Comm’n, Property Tax Reg. part No. 15, eff.…

NAC 361.366 “Rate of return” defined. (NRS 360.090, 361.320) “Rate of return” is a general term that means: 1. The yield to an investor variously on the investor’s net investment or on the property value; or 2. The ratio of either the net operating income or the before-tax cash f…

NAC 361.368 “Recapture” defined. (NRS 360.090, 361.320) “Recapture” means the recovery of a capital investment. More specifically, it is the portion of the net operating income or the cash flow that provides for the periodic repayment of invested capital. Recapture may also be ac…

NAC 361.370 “Remaining economic life” defined. (NRS 360.090, 361.320) “Remaining economic life” means the difference between the economic life and the present effective age of an income producing property. [Tax Comm’n, Property Tax Reg. part No. 15, eff. 10-30-79]

NAC 361.372 “Replacement cost” defined. (NRS 360.090, 361.320) “Replacement cost” means the cost of acquiring or constructing, at current prices, a property which is the functional equivalent of an existing property. [Tax Comm’n, Property Tax Reg. part No. 15, eff. 10-30-79]

NAC 361.374 “Reproduction cost” defined. (NRS 360.090, 361.320) “Reproduction cost” means the cost of acquiring or constructing, at current prices, a property identical to an existing property. [Tax Comm’n, Property Tax Reg. part No. 15, eff. 10-30-79]

NAC 361.376 “Reserve life” defined. (NRS 360.090, 361.320) “Reserve life” means an estimated number of years that the gas reserves of a natural gas transmission company will last. For example, the remaining life of a natural gas transmission company would be the estimated number …

NAC 361.378 “Retirement depreciation” defined. (NRS 360.090, 361.320) “Retirement depreciation” means a method of accounting for the total depreciation expense at the date of retirement rather than by systematic additions to a depreciation reserve during the life of the property.…

NAC 361.380 “Return on equity” defined. (NRS 360.090, 361.320) “Return on equity” means the ratio of earnings on the common equity divided by the book value of the common equity interests. [Tax Comm’n, Property Tax Reg. part No. 15, eff. 10-30-79]

NAC 361.382 “Revenue” defined. (NRS 360.090, 361.320) “Revenue” means the gross dollars received for materials furnished or services rendered. The term is usually used in conjunction with business sales as opposed to the earnings of a natural person. [Tax Comm’n, Property Tax Reg…

NAC 361.384 “Risk” defined. (NRS 360.090, 361.320) “Risk” means the degree of uncertainty regarding the receipt of future income, whether in the form of interest or of net operating income. The higher the risk, the greater the annual percentage rate of return demanded by investor…

NAC 361.386 “Sinking fund” defined. (NRS 360.090, 361.320) “Sinking fund” means the fund to which periodic cash deposits are made for ultimately repaying a debt or replacing an asset. Usually, a sinking fund receives equal periodic deposits upon which interest is compounded at a …

NAC 361.387 “Statistical median” defined. (NRS 360.090, 361.320) “Statistical median” means the representative intermediate value calculated for a distribution or range of data usually grouped in several intervals of equal value lying between the two extreme values. (Added to NAC…

NAC 361.388 “Straight-line depreciation” defined. (NRS 360.090, 361.320) “Straight-line depreciation” means the accounting practice of recording equal annual increments of depreciation over the estimated life of an asset. In an appraisal it means equal annual increments of loss i…

NAC 361.390 “Summation method of valuation” defined. (NRS 360.090, 361.320) “Summation method of valuation” means the combining of fractional valuations into one value such as the addition of the value of a house to the value of the lot to produce a total residential value. [Tax …

NAC 361.392 “System” defined. (NRS 360.090, 361.320) “System” means an integrated operation of units which may be related entities or may be property elements such as machinery, buildings, land and other property used in the performance of a service or the manufacture of a produc…

NAC 361.394 “Tariff” defined. (NRS 360.090, 361.320) “Tariff” means the compilation of the schedules of rates applicable to each of the products or services supplied to the public and the regulations governing other aspects of the sale. [Tax Comm’n, Property Tax Reg. part No. 15,…

NAC 361.396 “Taxable value” defined. (NRS 360.090, 361.320) “Taxable value” means the value of a property determined by using the cost, income and market approaches as described in NAC 361.200 to 361.508, inclusive. [Tax Comm’n, Property Tax Reg. part No. 15, eff. 10-30-79]—(NAC …

NAC 361.398 “Times interest earned” defined. (NRS 360.090, 361.320) “Times interest earned” means the ratio of earnings before the interest expense to the interest expense. The factor is an element used in determining risk by the purchaser of debt issues of a company. Generally, …

NAC 361.400 “Uniform system of accounts” defined. (NRS 360.090, 361.320) “Uniform system of accounts” means the prescribed method of accounting adopted by a state regulatory agency, such as a public service commission, or by a federal regulatory agency such as the Department of T…

NAC 361.402 “Unitary method of valuation” defined. (NRS 360.090, 361.320) “Unitary method of valuation,” as used in the central assessment of utilities, is a method of valuation which recognizes that a utility is an integrated enterprise and that its market value is not a summati…

NAC 361.404 “Variable expenses” defined. (NRS 360.090, 361.320) “Variable expenses” means those expenses of a business enterprise which vary with changes in the volume of output such as outlays for fuel to generate electric power. [Tax Comm’n, Property Tax Reg. part No. 15, eff. …

NAC 361.406 “Yield to maturity” defined. (NRS 360.090, 361.320) “Yield to maturity” means the computation of the average rate of return on outstanding debt issues taking into consideration the current price, interest payments and capital gains or losses at the maturity of the iss…

NAC 361.408 Indicators of value: Cost approach; income approach; market or stock and debt approach; reconciliation. (NRS 360.090, 361.320) 1. The cost approach consists of that cost of all operating assets subject to the ad valorem property tax pursuant to NRS 361.315 and 361.320…

NAC 361.410 Use of unit rule of valuation. (NRS 360.090, 361.320) In the valuation of those properties which are listed in NRS 361.320, the unit rule of valuation will be used when considered applicable. The unit rule generally applies to companies which own or operate lines or r…

NAC 361.411 Reports of construction work in progress. (NRS 360.090, 361.321) Construction work in progress must be reported to the Department to the extent to which it provides additional capacity even though part of the new construction replaces existing property. (Added to NAC …

NAC 361.421 Cost approach indicator of value: Determination. (NRS 360.090, 361.320) The cost approach consists of: 1. Determining the gross book cost for financial reporting purposes of all taxable operating property, including, but not limited to, all property relating to rail t…

NAC 361.4215 Cost approach indicator of value: Optional cost information. (NRS 360.090, 361.320) The taxpayer may present and the Department shall consider, in addition to the information required by NAC 361.421, one or more of the following alternative cost indicators of value: …

NAC 361.423 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 expense…

NAC 361.425 Income approach indicator of value: Capitalization rate. (NRS 360.090, 361.320) The capitalization rate will be established from a selected number of firms to derive the rate for the typical company in each industry group when the information is available: 1. The band…

NAC 361.427 Stock and debt approach indicator of value. (NRS 360.090, 361.320) 1. The stock and debt approach proposes a value for the entire firm, but is generally recognized as a less applicable methodology for determining the value of taxable property. 2. The stock and debt in…

NAC 361.429 Reconciliation of indicators of value. (NRS 360.090, 361.320) 1. Immediately related to the valuation process is the reconciliation of one or more indicators of value to reach the final estimate of value for the system. 2. For multiple departmental companies, when con…