Senate Bill No. 351–Senator O’Donnell

 

March 14, 2001

____________

 

Referred to Committee on Taxation

 

SUMMARY—Exempts classic aircraft from tax on personal property. (BDR 32‑281)

 

FISCAL NOTE:            Effect on Local Government: Yes.

                                    Effect on the State: Yes.

 

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EXPLANATION – Matter in bolded italics is new; matter between brackets [omitted material] is material to be omitted.

 

AN ACT relating to taxation; exempting classic aircraft from the tax on personal property; and providing other matters properly relating thereto.

 

THE PEOPLE OF THE STATE OF NEVADA, REPRESENTED IN

SENATE AND ASSEMBLY, DO ENACT AS FOLLOWS:

 

1-1    Section 1.  NRS 361.068 is hereby amended to read as follows:

1-2    361.068  1.  The following personal property is exempt from taxation:

1-3    (a) Personal property held for sale by a merchant;

1-4    (b) Personal property held for sale by a manufacturer;

1-5    (c) Raw materials and components held by a manufacturer for

1-6  manufacture into products, and supplies to be consumed in the process of

1-7  manufacture;

1-8    (d) Tangible personal property purchased by a business which will be

1-9  consumed during the operation of the business;

1-10    (e) Livestock;

1-11    (f) Colonies of bees;

1-12    (g) Pipe and other agricultural equipment used to convey water for the

1-13  irrigation of legal crops;

1-14    (h) All boats;

1-15    (i) Slide-in campers and camper shells;

1-16    (j) Except as otherwise provided in NRS 361.186, fine art for public

1-17  display; [and]

1-18    (k) Computers and related equipment donated for use in schools in this

1-19  state[.] ; and

1-20    (l) Classic aircraft that is on display to the general public in this state

1-21  for at least 12 days in each year for which the exemption is claimed.

1-22    2.  The Nevada tax commission may exempt from taxation that

1-23  personal property for which the annual taxes would be less than the cost of

1-24  collecting those taxes. If such an exemption is provided, the Nevada tax

2-1  commission shall annually determine the average cost of collecting

2-2  property taxes in this state which must be used in determining the

2-3  applicability of the exemption.

2-4    3.  A person claiming the exemption provided for in paragraph (j) of

2-5  subsection 1 shall:

2-6    (a) On or before June 15 for the next ensuing fiscal year, file with the

2-7  county assessor an affidavit declaring that the fine art will, during that

2-8  ensuing fiscal year, meet all the criteria set forth in paragraph [(b)] (c) of

2-9  subsection 5; and

2-10    (b) During any fiscal year in which he claims the exemption, make

2-11  available for educational purposes and not for resale, upon written request

2-12  and without charge to any public school as defined in NRS 385.007,

2-13  private school as defined in NRS 394.103 and parent of a child who

2-14  receives instruction in a home pursuant to NRS 392.070, one copy of a

2-15  poster depicting the fine art that the facility has on public display if such a

2-16  poster is available for purchase by the public at the time of the request.

2-17    4.  To qualify for the exemption provided in paragraph (k) of

2-18  subsection 1, a taxpayer must donate the property through a foundation or

2-19  organization, not for profit, that accepts such property for use in schools in

2-20  this state. The foundation or organization shall issue a voucher identifying

2-21  each item of property donated. To obtain the benefit of the exemption, the

2-22  taxpayer must apply to the county assessor and tender the voucher. The

2-23  county assessor shall compute the assessed value of the property for the

2-24  year in which the donation was made using the original cost and the year of

2-25  acquisition. The county assessor shall allow a credit of that amount against

2-26  the personal property assessment for the year following the donation.

2-27    5.  As used in this section:

2-28    (a) “Boat” includes any vessel or other watercraft, other than a seaplane,

2-29  used or capable of being used as a means of transportation on the water.

2-30    (b) “Classic aircraft” means any aircraft that is an original, restored

2-31  or replica of a heavier-than-air-powered aircraft that is at least 35 years

2-32  old or is of a type or model of which there are less than five known to

2-33  exist, that is owned by a person who does not hold the aircraft primarily

2-34  for sale or use the aircraft for commercial purposes or general

2-35  transportation.

2-36    (c) “Fine art for public display”:

2-37      (1) Except as otherwise provided in subparagraph (2), means a work

2-38  of art which:

2-39        (I) Is an original painting in oil, mineral, water colors, vitreous

2-40  enamel, pastel or other medium, an original mosaic, drawing or sketch, an

2-41  original sculpture of clay, textiles, fiber, wood, metal, plastic, glass or a

2-42  similar material, an original work of mixed media or a lithograph;

2-43        (II) Was purchased in an arm’s length transaction for $25,000 or

2-44  more, or has an appraised value of $25,000 or more;

2-45        (III) Is on public display in a public or private art gallery, museum

2-46  or other building or area in this state for at least 20 hours per week during

2-47  at least 35 weeks of each year for which the exemption is claimed or, if the

2-48  facility displaying the fine art disposes of it before the end of that year,

2-49  during at least two-thirds of the full weeks during which the facility had

3-1  possession of it, or if the gallery, museum or other building or area in

3-2  which the fine art will be displayed will not be opened until after the

3-3  beginning of the fiscal year for which the exemption is claimed, these

3-4  display requirements must instead be met for the first full fiscal year after

3-5  the date of opening, and the date of opening must not be later than 2 years

3-6  after the purchase of the fine art being displayed; and

3-7         (IV) Is on display in a facility that is available for group tours by

3-8  pupils or students for at least 5 hours on at least 60 days of each full year

3-9  for which the exemption is claimed, during which the facility in which it is

3-10  displayed is open, by prior appointment and at reasonable times, without

3-11  charge; and

3-12      (2) Does not include:

3-13        (I) A work of fine art that is a fixture or an improvement to real

3-14  property;

3-15        (II) A work of fine art that constitutes a copy of an original work of

3-16  fine art, unless the work is a lithograph that is a limited edition and that is

3-17  signed and numbered by the artist;

3-18        (III) Products of filmmaking or photography, including, without

3-19  limitation, motion pictures;

3-20        (IV) Literary works;

3-21        (V) Property used in the performing arts, including, without

3-22  limitation, scenery or props for a stage; or

3-23        (VI) Property that was created for a functional use other than, or in

3-24  addition to, its aesthetic qualities, including, without limitation, a classic or

3-25  custom-built automobile or boat, a sign that advertises a business, and

3-26  custom or antique furniture, lamps, chandeliers, jewelry, mirrors, doors or

3-27  windows.

3-28    [(c)] (d) “Personal property held for sale by a merchant” includes

3-29  property that:

3-30      (1) Meets the requirements of sub-subparagraphs (I) and (II) of

3-31  subparagraph (1) of paragraph [(b);] (c);

3-32      (2) Is made available for sale within 2 years after it is acquired; and

3-33      (3) Is made available for viewing by the public or prospective

3-34  purchasers, or both, within 2 years after it is acquired, whether or not a fee

3-35  is charged for viewing it and whether or not it is also used for purposes

3-36  other than viewing.

3-37    [(d)] (e) “Public display” means the display of a work of fine art where

3-38  members of the public have access to the work of fine art for viewing

3-39  during publicly advertised hours. The term does not include the display of

3-40  a work of fine art in an area where the public does not generally have

3-41  access, including, without limitation, a private office, hallway or meeting

3-42  room of a business, a room of a business used for private lodging and a

3-43  private residence.

3-44    [(e)] (f) “Pupil” means a person who:

3-45      (1) Is enrolled for the current academic year in a public school as

3-46  defined in NRS 385.007 or a private school as defined in NRS 394.103; or

3-47      (2) Receives instruction in a home and is excused from compulsory

3-48  attendance pursuant to NRS 392.070.

4-1    [(f)] (g) “Student” means a person who is enrolled for the current

4-2  academic year in:

4-3       (1) A community college or university; or

4-4       (2) A licensed postsecondary educational institution as defined in

4-5  NRS 394.099 and a course concerning fine art.

4-6    Sec. 2.  NRS 361.068 is hereby amended to read as follows:

4-7    361.068  1.  The following personal property is exempt from taxation:

4-8    (a) Personal property held for sale by a merchant;

4-9    (b) Personal property held for sale by a manufacturer;

4-10    (c) Raw materials and components held by a manufacturer for

4-11  manufacture into products, and supplies to be consumed in the process of

4-12  manufacture;

4-13    (d) Tangible personal property purchased by a business which will be

4-14  consumed during the operation of the business;

4-15    (e) Livestock;

4-16    (f) Colonies of bees;

4-17    (g) Pipe and other agricultural equipment used to convey water for the

4-18  irrigation of legal crops;

4-19    (h) All boats;

4-20    (i) Slide-in campers and camper shells; [and]

4-21    (j) Except as otherwise provided in NRS 361.186, fine art for public

4-22  display[.] ; and

4-23    (k) Classic aircraft that is on display to the general public in this state

4-24  for at least 12 days in each year for which the exemption is claimed.

4-25    2.  The Nevada tax commission may exempt from taxation that

4-26  personal property for which the annual taxes would be less than the cost of

4-27  collecting those taxes. If such an exemption is provided, the Nevada tax

4-28  commission shall annually determine the average cost of collecting

4-29  property taxes in this state which must be used in determining the

4-30  applicability of the exemption.

4-31    3.  A person claiming the exemption provided for in paragraph (j) of

4-32  subsection 1 shall:

4-33    (a) On or before June 15 for the next ensuing fiscal year, file with the

4-34  county assessor an affidavit declaring that the fine art will, during that

4-35  ensuing fiscal year, meet all the criteria set forth in paragraph [(b)] (c) of

4-36  subsection 4; and

4-37    (b) During any fiscal year in which he claims the exemption, make

4-38  available for educational purposes and not for resale, upon written request

4-39  and without charge to any public school as defined in NRS 385.007,

4-40  private school as defined in NRS 394.103 and parent of a child who

4-41  receives instruction in a home pursuant to NRS 392.070, one copy of a

4-42  poster depicting the fine art that the facility has on public display if such a

4-43  poster is available for purchase by the public at the time of the request.

4-44    4.  As used in this section:

4-45    (a) “Boat” includes any vessel or other watercraft, other than a seaplane,

4-46  used or capable of being used as a means of transportation on the water.

4-47    (b) “Classic aircraft” means any aircraft that is an original, restored

4-48  or replica of a heavier-than-air-powered aircraft that is at least 35 years

4-49  old or is of a type or model of which there are less than five known to

5-1  exist, that is owned by a person who does not hold the aircraft primarily

5-2  for sale or use the aircraft for commercial purposes or general

5-3  transportation.

5-4    (c) “Fine art for public display”:

5-5       (1) Except as otherwise provided in subparagraph (2), means a work

5-6  of art which:

5-7         (I) Is an original painting in oil, mineral, water colors, vitreous

5-8  enamel, pastel or other medium, an original mosaic, drawing or sketch, an

5-9  original sculpture of clay, textiles, fiber, wood, metal, plastic, glass or a

5-10  similar material, an original work of mixed media or a lithograph;

5-11        (II) Was purchased in an arm’s length transaction for $25,000 or

5-12  more, or has an appraised value of $25,000 or more;

5-13        (III) Is on public display in a public or private art gallery, museum

5-14  or other building or area in this state for at least 20 hours per week during

5-15  at least 35 weeks of each year for which the exemption is claimed or, if the

5-16  facility displaying the fine art disposes of it before the end of that year,

5-17  during at least two-thirds of the full weeks during which the facility had

5-18  possession of it, or if the gallery, museum or other building or area in

5-19  which the fine art will be displayed will not be opened until after the

5-20  beginning of the fiscal year for which the exemption is claimed, these

5-21  display requirements must be met for the first full fiscal year after the date

5-22  of opening, and the date of opening must not be later than 2 years after the

5-23  purchase of the fine art being displayed; and

5-24        (IV) Is on display in a facility that is available for group tours by

5-25  pupils or students for at least 5 hours on at least 60 days of each full year

5-26  for which the exemption is claimed, during which the facility in which it is

5-27  displayed is open, by prior appointment and at reasonable times, without

5-28  charge; and

5-29      (2) Does not include:

5-30        (I) A work of fine art that is a fixture or an improvement to real

5-31  property;

5-32        (II) A work of fine art that constitutes a copy of an original work of

5-33  fine art, unless the work is a lithograph that is a limited edition and that is

5-34  signed and numbered by the artist;

5-35        (III) Products of filmmaking or photography, including, without

5-36  limitation, motion pictures;

5-37        (IV) Literary works;

5-38        (V) Property used in the performing arts, including, without

5-39  limitation, scenery or props for a stage; or

5-40        (VI) Property that was created for a functional use other than, or in

5-41  addition to, its aesthetic qualities, including, without limitation, a classic or

5-42  custom-built automobile or boat, a sign that advertises a business, and

5-43  custom or antique furniture, lamps, chandeliers, jewelry, mirrors, doors or

5-44  windows.

5-45    [(c)] (d) “Personal property held for sale by a merchant” includes

5-46  property that:

5-47      (1) Meets the requirements of sub-subparagraphs (I) and (II) of

5-48  subparagraph (1) of paragraph [(b);] (c);

5-49      (2) Is made available for sale within 2 years after it is acquired; and

6-1       (3) Is made available for viewing by the public or prospective

6-2  purchasers, or both, within 2 years after it is acquired, whether or not a fee

6-3  is charged for viewing it and whether or not it is also used for purposes

6-4  other than viewing.

6-5    [(d)] (e) “Public display” means the display of a work of fine art where

6-6  members of the public have access to the work of fine art for viewing

6-7  during publicly advertised hours. The term does not include the display of

6-8  a work of fine art in an area where the public does not generally have

6-9  access, including, without limitation, a private office, hallway or meeting

6-10  room of a business, a room of a business used for private lodging and a

6-11  private residence.

6-12    [(e)] (f) “Pupil” means a person who:

6-13      (1) Is enrolled for the current academic year in a public school as

6-14  defined in NRS 385.007 or a private school as defined in NRS 394.103; or

6-15      (2) Receives instruction in a home and is excused from compulsory

6-16  attendance pursuant to NRS 392.070.

6-17    [(f)] (g) “Student” means a person who is enrolled for the current

6-18  academic year in:

6-19      (1) A community college or university; or

6-20      (2) A licensed postsecondary educational institution as defined in

6-21  NRS 394.099 and a course concerning fine art.

6-22    Sec. 3.  NRS 361.186 is hereby amended to read as follows:

6-23    361.186  1.  A taxpayer may collect an admission fee for the

6-24  exhibition of fine art otherwise exempt from taxation pursuant to NRS

6-25  361.068 if the taxpayer offers to residents of the State of Nevada a discount

6-26  of 50 percent from any admission fee charged to nonresidents. The

6-27  discounted admission fee for residents must be offered at any time the

6-28  exhibition is open to the public and admission fees are being charged.

6-29    2.  Except as otherwise provided in subsection 5, if a taxpayer collects

6-30  a fee for the exhibition of fine art otherwise exempt from taxation pursuant

6-31  to NRS 361.068, the exemption pertaining to that fine art for the fiscal year

6-32  must be reduced by the net revenue derived by the taxpayer for that fiscal

6-33  year. The exemption pertaining to fine art for a particular fiscal year must

6-34  not be reduced below zero, regardless of the amount of the net revenue

6-35  derived by the taxpayer for that fiscal year.

6-36    3.  A tax resulting from the operation of this section is due with the tax

6-37  otherwise due under the taxpayer’s first statement filed pursuant to NRS

6-38  361.265 after the 15th day of the fourth month after the end of the fiscal

6-39  year in which the net revenue was received or, if no such statement is

6-40  required to be filed, under a statement of the net revenue filed on or before

6-41  the last day of the fourth month after the end of that fiscal year.

6-42    4.  A taxpayer who is required to pay a tax resulting from the operation

6-43  of this section may receive a credit against the tax for any donations made

6-44  by the taxpayer to the state arts council, the division of museums and

6-45  history dedicated trust fund established pursuant to NRS 381.0031, a

6-46  museum that provides exhibits specifically related to nature or a museum

6-47  that provides exhibits specifically related to children, if the taxpayer:

6-48    (a) Made the donation before the date that either statement required

6-49  pursuant to subsection 3 is due; and

7-1    (b) Provides to the county assessor documentation of the donation at the

7-2  time that he files the statement required pursuant to subsection 3.

7-3    5.  If a taxpayer qualifies for and avails himself of both of the

7-4  exemptions from taxation provided by NRS 361.068 and 374.291, the

7-5  reduction of the exemptions by the net revenue derived by the taxpayer, as

7-6  required pursuant to subsection 2 of this section and subsection 2 of NRS

7-7  374.2911, must be carried out in such a manner that the total net revenue

7-8  derived by the taxpayer is first applied to reduce the exemption provided

7-9  pursuant to NRS 374.291. If the net revenue exceeds the amount of the

7-10  exemption provided pursuant to NRS 374.291, the remaining net revenue

7-11  must be applied to reduce the exemption provided pursuant to NRS

7-12  361.068. If the net revenue is less than or equal to the exemption provided

7-13  pursuant to NRS 374.291 for that fiscal year, the exemption provided

7-14  pursuant to NRS 361.068 must not be reduced.

7-15    6.  For the purposes of this section:

7-16    (a) “Direct costs of owning and exhibiting the fine art” does not include

7-17  any allocation of the general and administrative expense of a business or

7-18  organization that conducts activities in addition to the operation of the

7-19  facility in which the fine art is displayed, including, without limitation, an

7-20  allocation of the salary and benefits of a senior executive who is

7-21  responsible for the oversight of the facility in which the fine art is

7-22  displayed and who has substantial responsibilities related to the other

7-23  activities of the business or organization.

7-24    (b) “Net revenue” means the amount of the fees collected for exhibiting

7-25  the fine art during that fiscal year less the following paid or made during

7-26  that fiscal year:

7-27      (1) The direct costs of owning and exhibiting the fine art; and

7-28      (2) The cost of educational programs associated with the taxpayer’s

7-29  public display of fine art, including the cost of meeting the requirements of

7-30  sub-subparagraph (IV) of subparagraph (1) of paragraph [(b)] (c) of

7-31  subsection 5 of NRS 361.068.

7-32    Sec. 4.  1.  This section and sections 1 and 3 of this act become

7-33  effective on July 1, 2001.

7-34    2.  Section 1 of this act expires by limitation on July 1, 2003.

7-35    3.  Section 2 of this act becomes effective at 12:02 a.m. on July 1,

7-36  2003.

 

7-37  H