Roberta Francine Gilmore v. Department of Revenue

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BEFORE THE STATE TAX APPEAL BOARD
OF THE STATE OF MONTANA
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ROBERTA FRANCINE GILMORE, 	)
)
Appellant, 	) 	DOCKET NO.: SPT-2005-1
)
-vs- 	)
)
THE DEPARTMENT OF REVENUE 	) 	FACTUAL BACKGROUND,
OF THE STATE OF MONTANA, 	) 	CONCLUSIONS OF LAW,
) 	ORDER and OPPORTUNITY
Respondent. 	) 	FOR JUDICIAL REVIEW
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The above-entitled appeal was heard on December 8, 2005 in the
City 	of 	Kalispell, 	in 	accordance 	with 	an 	order 	of 	the 	State 	Tax
Appeal Board of the State of Montana (the Board). The hearing was
conducted for the Board by member Joe Roberts with the full Board
participating through the recorded transcript of the hearing, the
pleadings 	submitted 	by 	the 	parties 	in 	the 	case 	file, 	and 	the
exhibits 	admitted 	at 	the 	hearing 	and, 	in 	the 	case 	of 	Appellant,
subsequent to the hearing. The notice of the hearing was given as
required by law.
The Appellant, Roberta Gilmore, provided testimony in support
of 	her 	appeal. 	Scott 	Williams, 	Region 	Lead, 	represented 	the
Respondent, Department of Revenue (DOR) and provided testimony in
opposition 	to 	the 	appeal. 	He 	was 	assisted 	at 	the 	hearing 	by 	Nina
Woolard 	of 	the 	regional 	DOR 	staff. 	Testimony 	was 	presented 	and
exhibits 	were 	received 	from 	both 	parties. 	State’s 	Exhibit 	B, 	a

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legal 	memorandum 	from 	the 	Department 	of 	Revenue 	legal 	staff, 	was
admitted into evidence with the proviso that Appellant would have
an opportunity to reply to it after the hearing. Appellant’s reply
was 	received 	on 	January 	10, 	2006; 	the 	matter 	is 	deemed 	submitted
and ready for decision.
STATEMENT OF THE ISSUE
The 	issue 	before 	the 	Board 	in 	this 	appeal 	is 	whether 	the
Appellant meets the income guidelines established in Section 15-6-
134, 	MCA, 	to 	qualify 	for 	property 	tax 	assistance. 	The 	pertinent
portion 	of 	the 	statute 	provides 	that 	a 	single 	person 	not 	exceed
$15,000 in “total income from all sources, including net business
income 	and 	otherwise 	tax-exempt 	income 	of 	all 	types…..” 	(Section
15-6-134 (1)(c))
FACTUAL BACKGROUND
1. Due, proper and sufficient notice was given of this matter, the
hearing 	hereon, 	and 	of 	the 	time 	and 	place 	of 	the 	hearing. 	All
parties were afforded opportunity to present evidence, oral and
documentary, and Appellant was afforded the opportunity to make
a post-hearing submission.
2. Appellant Roberta Gilmore filed with the DOR the form entitled
“Property Tax Assistance” on March 15, 2005. (State’s Exhibit A)
The 	form 	indicated 	two 	positive 	sources 	of 	income: 	$18,000 	in
the 	category 	of 	“Other 	Income” 	beside 	which 	Appellant 	had
written “dividends”. The other area of positive income noted on

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the form was $200 in the category of “Interest Income”.
3. Consistent with its view of the statute (see below), the DOR did
not 	allow 	for 	any 	deductions 	on 	the 	form 	it 	used. 	However, 	in
the category of “Net Business Income Before Depreciation and/or
Depletion” Appellant had listed negative income of $12,144. The
income was listed as negative by being enclosed in parentheses.
4. The form providing for the property tax assistance also states
that in stating the “Net Business Income” the applicant should
provide 	copies 	of 	IRS 	Schedules 	C,E,or 	F. 	Only 	Schedule 	E 	was
provided by Appellant but it did not reference the amount that
was 	claimed 	on 	the 	form. 	The 	Schedule 	E 	provided 	by 	the
applicant/Appellant 	was 	for 	the 	amount 	of 	$1690 	of 	income
through a business known as “Glacier Sea Kayaking, Inc.”.
5. Sometime 	after 	filing 	her 	2004 	federal 	income 	taxes 	Appellant
updated 	her 	filing 	to 	reflect 	the 	actual 	figures 	for 	2004.
(Appellant’s Exhibit 3). In this document Appellant acknowledges
income in the amount of $29,206 for 2004 and claims a deduction
of $24,221 as a Schedule D carryover capital loss.
6. DOR 	denied 	the 	request 	for 	tax 	assistance 	because 	it 	does 	not
recognize 	capital 	losses 	against 	the 	income 	referenced 	in
Section 15-6-134 of the property tax assistance program. Without

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the recognition of such a capital loss, taxpayer’s income would
exceed the amount to qualify for property tax reduction.
TAXPAYER’S CONTENTIONS
Taxpayer asserts that DOR has taken a very restrictive view
of the definition of “income” for purposes of applying the property
tax assistance program. Taxpayer refers to a definition of “income”
used 	by 	the 	department 	in 	its 	legal 	memorandum 	(Exhibit 	B) 	as
referring to income as “the true increase in amount of wealth which
comes 	to 	a 	person 	during 	a 	stated 	period 	of 	time.” 	(quoting 	from
Black’s Law Dictionary).
It 	seems 	clear 	to 	Taxpayer 	that 	any 	common 	understanding 	of
“income” 	would 	be 	total 	revenues 	minus 	expenses. 	Taxpayer 	notes
that 	both 	the 	federal 	and 	state 	income 	tax 	forms 	1040 	and
associated schedules recognize losses as well as gains in order to
arrive at a determination of “income”.
In 	arriving 	at 	“income”, 	and 	particularly 	“adjusted 	gross
income”, 	both 	federal 	and 	state 	tax 	forms 	recognize 	a 	variety 	of
deductions 	and 	losses. 	It 	is 	only 	appropriate, 	according 	to 	the
Taxpayer, 	that 	similar 	calculations 	should 	be 	applied 	when
determining 	“income” 	for 	the 	purposes 	of 	the 	property 	tax
assistance program.
Taxpayer 	asserts 	that 	DOR 	has 	no 	lawful 	basis 	to 	refuse 	to
recognize her capital loss carryover.
DOR CONTENTIONS
DOR 	contends 	that 	a 	careful 	and 	proper 	reading 	of 	the

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statute which establishes the property tax assistance program does
not allow for the offset of capital losses against the income of a
taxpayer. 	It 	is 	basically 	gross 	income 	which 	is 	referred 	to, 	and
“gross income” does not allow for deductions or losses against it.
As argued in their legal memorandum (Exhibit B), DOR asserts
that if the Legislature had intended to allow an offset for capital
losses and other deductions, it could have done so by referring to
“adjusted gross income”.
In 	DOR’s 	view, 	the 	meaning 	of 	the 	statute 	is 	clear 	and
plain: only income is looked to, including capital gains. Capital
losses are not allowable as an offset for this statute, though of
course they may be when filing for income taxation purposes. Using
the broader term of “adjusted gross income” is certainly beyond the
intent 	of 	the 	statute, 	and 	could 	easily 	have 	been 	used 	by 	the
Legislature if that was their true intention.
It 	seems 	clear 	that 	the 	Legislature 	intended 	this 	to 	be 	a
very limited program to help only the neediest people of the state
in meeting their property tax obligation.
BOARD DISCUSSION
Section 	15-6-134, 	MCA, 	provides 	for 	a 	partial 	tax 	exemption
for those taxpayers “whose total income from all sources, including
net 	business 	income 	and 	otherwise 	tax-exempt 	income 	of 	all
types….is not more than $15,000 for a single person….” This is the
meat 	of 	the 	statute 	and 	it 	is 	the 	task 	of 	this 	Board 	to 	give 	it
meaning under the facts of this case.
It is first noted that the scope of the income is very broad

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as it refers to “income from all sources” and includes income that
would otherwise be “tax exempt income of all types.” The only area
that 	allows 	for 	any 	deductions 	is 	in 	the 	calculation 	of 	“net
business income”. This is apparently why the DOR form for property
tax 	assistance 	requires 	the 	filing 	of 	the 	Schedule 	E 	to 	document
the 	legitimate 	business 	costs 	that 	are 	used 	in 	arriving 	at 	a 	net
business income. Appellant did not submit any Schedule E that would
document the determination of net business income, and the capital
losses 	which 	she 	has 	attempted 	to 	deduct 	would 	not 	qualify 	as
business 	losses 	in 	any 	event. 	It 	should 	also 	be 	noted 	that 	the
statute 	providing 	for 	the 	inclusion 	of 	“tax 	exempt 	income” 	does
allow for the exclusion of “social security income paid directly to
a 	nursing 	home.” 	Section 	15-6-134(1)(c). 	This 	specific 	reference
simply 	underscores 	that 	the 	Legislature 	intended 	to 	define
“income”, for purposes of this particular exemption, very broadly.
It 	seems 	clear 	that 	the 	Taxpayer 	is 	reading 	the 	statute 	in
this instance to allow the computation of Adjusted Gross Income as
that 	term 	is 	used 	in 	state 	and 	federal 	income 	taxation. 	The
computation 	of 	Adjusted 	Gross 	Income 	would 	seem 	to 	admit 	the
deduction of capital losses, although, even then, it is interesting
to note that the capital loss can only be applied against current
income in the amount of $3,000 per year.
It is this Board’s view that the Legislature knew exactly what
it 	was 	doing 	in 	establishing 	the 	property 	tax 	exemption 	the 	way
that it did. The legislators apparently wanted this tax exemption

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to 	apply 	in 	only 	a 	limited 	number 	of 	cases, 	so 	they 	established
that the income would be considered “from all sources” and that it
would even include income that was otherwise “tax exempt”. If the
legislators 	had 	meant 	to 	use 	the 	Adjusted 	Gross 	Income 	standard,
which Taxpayer urges upon this Board, they could have easily done
so. The fact that they did not indicates that they had a much more
inclusive definition of income in mind.
While Taxpayer may fervently believe that the statute should
pertain 	to 	something 	akin 	to 	Adjusted 	Gross 	Income, 	the 	proper
forum to obtain such a result is with the Legislature itself.
We believe that, as written, the statute is clear about the
income that is included, and the fact that capital losses cannot be
applied against it, for determining whether the income requirements
of the property tax exemption statute have been met.
CONCLUSIONS OF LAW
1. 	The State Tax Appeal Board has jurisdiction over this matter.
Sections 15-2-302, MCA, 15-6-134(1),MCA and 15-6-191, MCA .
2. 	Section 15-6-134(1) refers to “income from all sources” in the
determination of the amount of annual income to consider under
the 	property 	tax 	exemption 	statute. 	Other 	than 	with 	“net
business 	income”, 	which 	must 	be 	substantiated 	by 	filing 	a
Schedule E, the statute does not admit of any deductions for
losses 	or 	expenses. 	It 	also 	provides 	for 	the 	inclusion 	of
income that would otherwise be “tax exempt”.

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3. 	The Board concludes that the plain meaning of the statute is
broader 	than 	Adjusted 	Gross 	Income 	or 	any 	other 	term 	that
allows 	for 	deductions 	and 	losses. 	The 	term 	involved 	in 	the
property tax exemption statute is for the limited purpose of
that 	statute 	(Section 	15-6-134) 	and 	is 	not 	found 	in, 	and 	is
not 	comparable 	to, 	other 	terms 	in 	either 	state 	or 	federal
income tax statutes.
4. 	The appeal of the appellant is hereby denied and the decision
of the DOR is affirmed.
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ORDER
IT IS THEREFORE ORDERED by the State Tax Appeal Board of the

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State 	of 	Montana 	that 	the 	application 	by 	the 	taxpayer 	for
qualification under the Property Tax Assistance Program for 2004 is
denied.
Dated this 25th day of January, 2006.
BY ORDER OF THE
STATE TAX APPEAL BOARD
_______________________________
GREGORY A. THORNQUIST, Chairman
_____________________________
JOE R. ROBERTS, Member
______________________________
SUE BARTLETT, Member
NOTICE: 	You 	are 	entitled 	to 	judicial 	review 	of 	this 	Order 	in
accordance with Section 15-2-303(2), MCA. 	Judicial review may be
obtained 	by 	filing 	a 	petition 	in 	district 	court 	within 	60 	days
following the service of this Order.

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CERTIFICATE OF SERVICE
The 	undersigned 	hereby 	certifies 	that 	on 	this 	25th 	day 	of
January, 2006, the foregoing Order of the Board was served on the
parties 	hereto 	by 	depositing 	a 	copy 	thereof 	in 	the 	U.S. 	Mails,
postage prepaid, addressed to the parties as follows:
Roberta Francine Gilmore
390 Tally Lake Road
Whitefish, Montana 59937
Office of Legal Affairs
Department of Revenue
Mitchell Building
Helena, Montana 59620
DOR Regional Office
Attn.: Scott Williams
100 Financial Drive, Suite 210
Kalispell, Montana 59901
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