Could a flat-glass manufacturer use an 11% annual property-tax depreciation rate for machinery instead of the statutory 9% schedule?

Plain-English summary

South Carolina Private Letter Ruling 87-4 allowed XYZ's proposed flat-glass plant to use an 11% annual straight-line depreciation rate for machinery and equipment instead of the 9% rate in the statutory schedule.

The adjustment was specific to the evidence about machinery and equipment in a flat-glass plant similar to XYZ's. The Commission relied on information supplied by XYZ, a Property Tax Division visit to one of XYZ's plants, and information obtained from firms that designed and constructed flat-glass plants.

Those sources indicated an overall annual depreciation rate of approximately 11%.

The scheduled rate

Section 12-37-930(9) provided a 9% annual depreciation allowance for machinery and equipment used by manufacturers of flat, blown, or pressed glass products.

The ruling listed examples including:

• plate glass;
• safety and window glass;
• glass containers;
• glassware; and
• fiberglass.

XYZ requested an increase from 9% to 11% for machinery and equipment at its proposed flat-glass plant.

The evidence supporting 11%

XYZ submitted facts and statistics indicating that the plant equipment's annual depreciation rate was 11% rather than 9%.

The Property Tax Division visited a flat-glass plant owned by the taxpayer. It also sought information from firms that designed and built flat-glass plants.

The combined information supported an overall depreciation rate of approximately 11% per year for machinery and equipment in a plant similar to the proposed facility.

The Commission's adjustment authority

The final paragraph of section 12-37-930 allowed the Commission, after examining relevant facts, to adjust a scheduled percentage for extraordinary obsolescence, with the total allowance not exceeding 25%.

Using that authority and the submitted and independently gathered information, the Commission approved 11% straight-line depreciation for XYZ.

What this means for you

Glass manufacturers

PLR 87-4 shows a fact-specific departure from the scheduled rate. The taxpayer supported the request with operating evidence about comparable flat-glass machinery.

Property-tax departments

The adjustment was not automatic for the industry. It followed review of the taxpayer's facts, a site visit, and information from plant design and construction firms.

Equipment appraisers

The ruling focused on the overall depreciation experienced by machinery and equipment in a similar flat-glass plant and approved a straight-line rate.

Manufacturers seeking schedule adjustments

The cited statute required examination of relevant facts and tied adjustment authority to extraordinary obsolescence.

Readers applying the ruling today

PLR 87-4 applied a 1987 depreciation schedule to one proposed plant. Current property-tax schedules, appraisal practice, obsolescence standards, evidence requirements, caps, and local assessment procedures must be checked independently.

Common questions

Q: What rate did the statute schedule for glass machinery?

A: Section 12-37-930(9) provided 9% annually.

Q: What rate did XYZ receive?

A: The Commission allowed 11% per year on a straight-line basis.

Q: What evidence supported the increase?

A: XYZ's facts and statistics, a Property Tax Division plant visit, and information from firms that designed and constructed flat-glass plants.

Q: Did the ruling give every glass manufacturer an 11% rate?

A: No. It approved the rate for XYZ based on the information about its proposed plant and comparable machinery.

Q: What statutory basis allowed an adjustment?

A: Section 12-37-930 allowed the Commission to adjust the scheduled percentage after reviewing relevant facts on extraordinary obsolescence.

Q: Can another manufacturer rely on PLR 87-4?

A: No. The ruling states that it applied only to XYZ's specific facts, had no precedential value, and was not intended for distribution.

Citations and references

• S.C. Code section 12-37-930(9) — scheduled glass-manufacturing depreciation and adjustment authority
• S.C. Code section 12-3-170 — private-letter-ruling authority

Source

• Landing page: https://dor.sc.gov/advisory-opinion-search
• Original PDF: https://dor.sc.gov/sites/dor/files/policies/PLR87-4.pdf

Original ruling text

SC PRIVATE LETTER RULING 87-4

TO:

XYZ Company

SUBJECT:

Depreciation Allowance - Valuation of Property

REFERENCE:

S.C. Code Section 12-37-930

AUTHORITY:

S.C. Code Section 12-3-170

SCOPE:

A Private Letter Ruling is a temporary document issued to a
taxpayer, upon request, and it applies only to the specific facts or
circumstances related in the request. Private Letter Rulings have no
precedential value and are not intended for distribution.

Question:
The taxpayer has requested an adjustment of the annual depreciation rate for
manufacturers of glass and glass products from 9% to 11%.
Facts:
The taxpayer has submitted to the Commission facts and statistics which indicate the
annual depreciation rate of the machinery and equipment for its proposed flat glass plant
to be 11% rather than the 9% provided under Section 12-37-930(9). The Property Tax
Division visited a flat glass plant belonging to the taxpayer and also solicited information
from firms that design and construct flat glass plants. This information indicated that the
overall depreciation rate for machinery and equipment in a flat glass plant similar
to the taxpayer's is approximately 11% per year rather than the 9% provided under
Section 12-37-930.
Discussion:
S.C. Code Section 12-37-930(9) provides a 9% annual depreciation allowance for
machinery and equipment of manufacturers of flat, blown, or pressed glass products, such
as plate, safety and window glass, glass containers, glassware and fiberglass.

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The last paragraph of Section 12-37-930 states:
"Notwithstanding the percentage allowance stated in the schedule above, the
Commission may, after examination of the relevant facts, permit an adjustment in
the percentage allowance, with the total allowance not to exceed twenty-five
percent, on account of extraordinary obsolescence."
Conclusion:
Based on information furnished by XYZ Corporation and the Property Tax Division,
XYZ Corporation will be allowed a depreciation rate of 11% per year on a straight line
basis pursuant to Section 12-37-930.

SOUTH CAROLINA TAX COMMISSION
s/S. Hunter Howard, Jr.
S. Hunter Howard, Jr., Chairman
s/John M. Rucker
John M. Rucker, Commissioner
s/Howard E. Duvall, Jr.
Howard E. Duvall, Jr., Commissioner

Columbia, South Carolina
May 7

, 1987

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