Close this search box.

The Voice of the

Commonwealth's Counties

Legislation affecting valuation of machinery and tools set for further consideration later in the week

VACo opposes HB 2640 (Byron), which would change a long-standing interpretation of one of the methods of valuation of machinery and tools currently specified in statute. Current Code provides that machinery and tools shall be valued by means of depreciated cost or “a percentage or percentages of original total capitalized cost excluding capitalized interest.”  Several Attorney General opinions and Tax Commissioner rulings have affirmed the validity of valuing the equipment based on the cost when purchased by the original owner.  HB 2640 would provide that “original total capitalized cost” would be defined instead as the cost of the equipment to the current owner, plus any cost incurred by the current owner to extend the useful life of the equipment, assuming the current owner acquired the equipment in an arm’s length transaction.  This provision could create a situation in which the same equipment of the same age is valued differently, depending on whether it is still owned by the original owner or had been sold to a new owner.

The bill was heard Monday morning by the House Finance Committee, but after concerns were raised about the potential implications of the legislation, House Finance Committee Chairman Lee Ware directed that the bill be sent to a subcommittee for a fuller hearing, presumably later this week.

VACo Contact:  Katie Boyle

Share This
Recent Posts