                                                                                   FILED
                                                                             Jun 05 2017, 2:43 pm

                                                                                   CLERK
                                                                               Indiana Supreme Court
                                                                                  Court of Appeals
                                                                                    and Tax Court




ATTORNEYS FOR PETITIONER                                  ATTORNEYS FOR RESPONDENT
Joshua C. Neal                                            Curtis T. Hill, Jr.
William A. Ramsey                                         Attorney General of Indiana
Barrett McNagny LLP                                       Winston Lin
Fort Wayne, Indiana                                       Jessica R. Gastineau
                                                          Deputy Attorneys General
                                                          Indianapolis, Indiana



                                            IN THE
                     INDIANA TAX COURT

Evansville Courier                                        June 5, 2017
Company Inc.,                                             Tax Court Case No.
Petitioner,                                               02T10-1611-TA-55
                                                          On Appeal from a Final
        v.                                                Determination of The Indiana
                                                          Board of Tax Review
Vanderburgh County Assessor,
Respondent




Baker, Special Judge.




Indiana Tax Court | Opinion 02T10-1611-TA-55 | June 5, 2017                                  Page 1 of 20
[1]   Evansville Courier Company, Inc. (Evansville Courier), seeks judicial review of

      the decision of the Indiana Board of Tax Review (the Board) denying

      Evansville Courier’s claimed tax deductions for the abnormal obsolescence of a

      printing press and related equipment. The Court finds that the Board

      improperly admitted an untimely-disclosed exhibit offered by the Vanderburgh

      County Assessor (the County) and that the Board did not err by finding that

      Evansville Courier did not make a prima facie case of abnormal obsolescence.

      We find that the Board erred by admitting the untimely exhibit. We also find,

      however, that the Board did not err by denying Evansville Courier’s petition,

      and affirm the Board’s judgment.


                                                         Facts     1




[2]   Evansville Courier is a daily newspaper publisher located in Evansville. Its

      primary paper, the Evansville Courier & Press, is published seven days per week.

      Over the last decade or so, Evansville Courier has experienced the downturn of

      the newspaper industry. In 2004, it employed approximately 500 people;

      currently, it employs approximately 215 people. In 2011, on average, it sold

      49,126 newspapers from Monday through Saturday, with an average Sunday

      circulation of 70,864 newspapers. By 2014, the average circulation decreased to

      39,999 newspapers during the week and to 57,111 on Sundays. It has




      1
       The Court held oral argument in this case in Fort Wayne on May 31, 2017. We thank Judge Surbeck and
      his staff for their warm hospitality, and we thank counsel for both parties for their excellent written and oral
      presentations.

      Indiana Tax Court | Opinion 02T10-1611-TA-55 | June 5, 2017                                          Page 2 of 20
      experienced an overall decline of nearly 60% in circulation since the 1990s.

      Evansville Courier anticipates that it will soon reduce the number of publication

      days for the Evansville Courier & Press and that at some point in the next ten

      years, it will stop printing newspapers altogether.


[3]   In 1989, Evansville Courier purchased a new 12-position flexographic printer

      (the Printing Press). At that time, the flexographic method of printing was

      expected to become the predominant method of printing newspapers, but

      within a few years, it became apparent that the industry preferred using an

      offset press rather than a flexographic press. At one time, there were as many

      as thirty newspaper companies nationwide using flexographic press printers, but

      now only twelve remain in use. The flexographic method of printing is more

      expensive than the alternative offset method. Additionally, Evansville Courier

      can no longer buy parts for the Printing Press from the manufacturer, meaning

      that it must have parts specially manufactured or purchase used parts from

      newspaper companies that once operated similar presses.


[4]   In July 2011, Evansville Courier filed its 2011 tax return. The 2011 Return

      included a separate schedule applying an abnormal obsolescence deduction to

      the Printing Press and related equipment. Evansville Courier filed similar

      returns for each of the 2013 and 2014 tax years. In sum, Evansville Courier

      requested the following approximate abnormal obsolescence adjustments:

      $649,398 for 2011; $3.5 million for 2013; and $5.1 million for 2014. The

      abnormal obsolescence adjustments were disallowed by Vanderburgh County

      for each of the three years.

      Indiana Tax Court | Opinion 02T10-1611-TA-55 | June 5, 2017               Page 3 of 20
[5]   The parties went through the required administrative process for each of the

      three tax returns.


           In March 2011, the Vanderburgh County Assessor had assessed the value
            of Evansville Courier’s personal property, including the Printing Press
            and related equipment, to be approximately $8.6 million. Appellant’s
            App. p. 4. Evansville Courier appealed that determination to the
            Vanderburgh County Property Tax Assessment Board of Appeals (the
            Vanderburgh County Board). Following an October 7, 2011, hearing,
            the Vanderburgh County Board affirmed the assessment of Evansville
            Courier’s personal property value to be approximately $8.6 million. Id.
            at 7-8. On December 5, 2011, Evansville Courier filed a petition with the
            Board seeking a review of the Vanderburgh County Board’s decision,
            asking that its property be valued at approximately $7.4 million. Id. at 1-
            3.

           In March 2013, the Vanderburgh County Assessor assessed the value of
            Evansville Courier’s personal property to be approximately $8.57
            million. Id. at 31. Evansville Courier appealed that determination to the
            Vanderburgh County Board, which, following a September 23, 2013,
            hearing, affirmed the assessment of the personal property value to be
            approximately $8.57 million. Id. at 35. On November 8, 2013,
            Evansville Courier filed a petition with the Board seeking a review of the
            Vanderburgh County Board’s decision, asking that its property be valued
            at approximately $5 million. Id. at 22-24.

           In March 2014, the Vanderburgh County Assessor assessed the value of
            Evansville Courier’s personal property to be approximately $7.6 million.
            Id. at 49. Evansville Courier appealed that determination to the
            Vanderburgh County Board, which, following a January 9, 2015,
            hearing, affirmed the assessor’s valuation. Id. at 48. On March 30, 2015,
            Evansville Courier filed a petition with the Board seeking a review of the
            Vanderburgh County Board’s decision, asking that its property be valued
            at approximately $2.5 million. Id. at 42-44.




      Indiana Tax Court | Opinion 02T10-1611-TA-55 | June 5, 2017             Page 4 of 20
      On January 26, 2016, the Board held a combined evidentiary hearing on each

      of Evansville Courier’s three pending petitions.


[6]   At the hearing, Evansville Courier submitted appraisals prepared by Brad

      Venisnik, an Accredited Senior Appraiser, in support of its claim for an

      abnormal obsolescence deduction for the Printing Press and related equipment

      for the years of 2011, 2013, and 2014. The appraisals were prepared in

      accordance with the Uniform Standards of Professional Appraisal Practice.

      Venisnik considered the cost, income, and market approaches to value. He

      relied most heavily on the market approach because that approach “most

      accurately quantifies all forms of depreciation and obsolescence.” Id. at 505.

      Venisnik researched the market by talking with the original equipment

      manufacturer, used equipment dealers, and other operators of two presses that

      are similar to the Printing Press.


[7]   Venisnik’s research indicated that (a) the original equipment manufacturer

      would attach a value of $865,000 to the Printing Press for the 2011 tax year;

      (b) no used equipment dealer had any interest in purchasing the Printing Press

      or any indications of recent comparable sales; and (c) other newspaper

      companies have discontinued operations of their flexographic presses and have

      sold the component parts for their scrap value. Venisnik concluded that it

      would be impractical to use the Printing Press for anything other than printing

      newspapers and that it lacks functionality for its best use because of an inherent

      inability to print color copy on both sides of the page. He therefore determined

      that it is not possible to cure the causes of the Printing Press’s obsolescence.

      Indiana Tax Court | Opinion 02T10-1611-TA-55 | June 5, 2017                Page 5 of 20
[8]    Based on his research, Venisnik placed a value on the Printing Press and related

       equipment for 2011 of $1.2 million. He calculated abnormal obsolescence by

       using a mathematical computation equal to the difference between the

       reportable value of the Printing Press and its equipment and the appraised

       value. For 2011, the amount of abnormal obsolescence was approximately $4.3

       million. For 2013 and 2014, the appraised value of the Printing Press and

       related equipment was $820,000 and $632,000, respectively. Thus, the amount

       of abnormal obsolescence for each of these years was approximately $4.44

       million for 2013 and $4.47 million for 2014.


[9]    As part of its case-in-chief, Vanderburgh County called Bill Fluty, the County

       assessor, to testify. During Fluty’s testimony, the County offered into evidence

       an evaluation of Venisnik’s market value appraisal of the property in 2014.

       Evansville Courier objected to this exhibit because it had not been provided to

       Evansville Courier five days before the hearing as required by the Indiana

       Administrative Code and because it was hearsay evidence. The County

       responded that the exhibit was rebuttal testimony and therefore did not have to

       comply with the five-day timeline. The Board took the issue under advisement

       and completed the hearing.


[10]   On September 19, 2016, the Board issued its final determination, which denied

       Evansville Courier’s petitions. In relevant part, the Board found and held as

       follows:

               16. [With respect to the exhibit that was not timely disclosed
               by the County,] [w]hile the Board’s procedural rules do not

       Indiana Tax Court | Opinion 02T10-1611-TA-55 | June 5, 2017              Page 6 of 20
        specifically exempt rebuttal evidence from the exchange
        requirements, the Board does recognize a general exception for
        rebuttal evidence. . . . The Board may exclude evidence offered
        as rebuttal that should have been presented in the party’s case-in-
        chief, but is not required to do so. Here, the Board is willing to
        make an exception because the exhibit was specifically offered to
        challenge the validity of the Petitioner’s appraisals. . . . Hence,
        the Petitioner’s objection is overruled as it pertains to the pre-
        hearing disclosure requirement.


                                                 ***


        18. Respondent’s Exhibit 4 is hearsay, and the Respondent
        failed to point to any recognized hearsay exception. However, it
        does nothing to either prove or disprove the property’s market
        value-in-use. As such, the exhibit is admitted. Because the
        Petitioner objected to the exhibit, it cannot serve as the sole basis
        for the Board’s decision. The Board notes however, the decision
        to allow Respondent’s Exhibit 4 does not affect the final
        determination.


                                                 ***


        72. Here, the Petitioner is making a claim of “abnormal
        obsolescence.” The argument was made that “unforeseen
        changes in market value have caused the subject property to
        suffer from abnormal obsolescence.” These alleged unforeseen
        changes include increased competition from various news
        sources, widespread access to the internet, the delivery of news
        through various social media outlets, and online advertising that
        negatively affects advertising revenue.


        73. The Petitioner’s press is 25 years old. It is reasonable to
        conclude that significant technological changes can, and will,
        occur over that time span. Examples of such changes include the

Indiana Tax Court | Opinion 02T10-1611-TA-55 | June 5, 2017                 Page 7 of 20
        virtual disappearance of items such as Beta videocassette
        recorders, cassette audiotapes, and typewriters. The invention of
        a newer, more productive piece of equipment capable of
        producing a better quality item does not necessarily mean an
        older, currently utilized item should be considered abnormally
        obsolete.


        74. No argument was made that the subject property is not
        capable of, or is not currently, performing the very task for which
        it was purchased. In fact, the press is still utilized daily. Further,
        just because other forms of “media” have become more
        prevalent, that does not necessarily qualify the items for
        “abnormal obsolescence.” As the Board has previously held,
        common events in the nature of business, such as increased
        competition, do not amount to abnormal obsolescence.


        75. Additionally: in order to qualify for “abnormal
        obsolescence,” the obsolescence must be of a “non-recurring
        nature.” The Board has heard previous appeals that offer
        guidance on the issue of “non-recurring nature.” See Jofco, Inc. v.
        Bainbridge Township Ass’r, et al, Pet. No. 19-018-04-1-7-00006
        (Ind. Bd. Tax Rev. December 28, 2005); and Kimball Int’1, Inc. v.
        Bainbridge Twp. Ass ’r, Pet. Nos.19-018-04-1-7-00007, 19-018-04-1-
        7-00008, and 19-018-04-1-7-00009 (Ind. Bd. Tax Rev. December
        30, 2005); see also Ind. Code § 4.2-9-3(a).


        76. The petitioners in Jofco and Kimball engaged in business
        dealings in New York and Washington. Both suffered a
        substantial decline in business, roughly 35% to 40%, following
        the “unexpected and unforeseen” terrorist attacks that occurred
        on September 11, 2001, in New York City and elsewhere. The
        Board agreed that, based upon a fact sensitive inquiry, the
        Petitioners qualified for an “abnormal obsolescence” deduction.
        Here, the Petitioner failed to point to a single, specific, non-
        recurring triggering event that would justify a determination of
        “abnormal obsolescence.” Further, the Petitioner failed to
Indiana Tax Court | Opinion 02T10-1611-TA-55 | June 5, 2017                  Page 8 of 20
        present any evidence its losses were remotely comparable to
        those suffered by the Petitioners in Jofco and Kimball.


        77. The Petitioner failed to show that the property under
        appeal suffered from “abnormal obsolescence.” . . .


        78. Even if the Board were to find the subject property has
        some degree of “abnormal obsolescence” the claim would still
        fail. The Petitioner’s appraiser failed to provide sufficient
        probative evidence that the cause for “abnormal obsolescence”
        resulted in a quantifiable loss in value. Instead of utilizing the
        appropriate method of calculating the assessment, the Petitioner’s
        appraiser chose to use the “market approach.” Methods of
        assessing personal property are substantially different from those
        used to assess real property, as previously explained. Further,
        even if Mr. Venisnik’s approach to value had been appropriate,
        his appraisal does not provide a reliable market value for the
        property under appeal.


        79. The sales comparison approach, or as Mr. Venisnik
        referred to it “the market approach,” requires gathering sufficient
        data on recently sold assets that are similar to the subject
        property, analyzing the value characteristics of those comparable
        assets, comparing the characteristics to those of the subject
        property and making appropriate adjustments for differences. It
        is difficult to see how Mr. Venisnik could have appropriately
        utilized this methodology when, according to his own testimony,
        there is “not an active market for the flexographic press.” Mr.
        Venisnik was unable to cite any “actual sale” of a flexographic
        press. Instead, he relied on “conversations” with the original
        equipment manufacturer, used equipment dealers, and other
        operators of flexographic presses. No probative evidence was
        presented that would persuade the Board that these individuals
        are able to establish a reliable value for a flexographic printing
        press. Further, Mr. Venisnik failed to show that “conversations”


Indiana Tax Court | Opinion 02T10-1611-TA-55 | June 5, 2017               Page 9 of 20
               regarding “opinions” of value followed generally accepted
               appraisal practices.


               80. With regard to the Petitioner’s argument stating it was
               “negatively impacted” by the decision to purchase a flexographic
               press rather than an offset press, this argument falls short.
               Presumably, a reasonably prudent purchaser of a multi-million
               dollar piece of equipment would be aware of the risks in
               purchasing equipment. The Petitioner acknowledges it was a
               “bad business decision.” But bad business decisions do not
               justify a finding of “abnormal obsolescence.”


               81. The Petitioner failed to establish a prima facie case for
               reducing the assessed value of its personal property. Where a
               Petitioner has not supported its claim with probative evidence,
               the Respondent’s duty to support the assessment with substantial
               evidence is not triggered.


       Appellant’s App. p. 86-108 (some internal citations omitted). Evansville

       Courier now seeks judicial review of the Board’s decision.


                                     Discussion and Decision
                                       I. Standard of Review
[11]   The Court gives great deference to decisions made by the Board when it acts

       within its authority. Hamilton Cty. Assessor v. Duke, 69 N.E.3d 567, 569 (Ind.

       Tax Ct. 2017). Accordingly, the Court will reverse only if the Board’s decision

       is arbitrary, capricious, an abuse of discretion, or otherwise not in accordance

       with law; contrary to constitutional right, privilege, or immunity; in excess or

       short of statutory jurisdiction, authority, or limitations; without observance of


       Indiana Tax Court | Opinion 02T10-1611-TA-55 | June 5, 2017              Page 10 of 20
       procedure required by law; or unsupported by substantial or reliable evidence.

       Ind. Code § 33-26-6-6(e). The party challenging the Board’s decision bears the

       burden of demonstrating its invalidity. Hamilton Cty., 69 N.E.3d at 569.


[12]   The Court defers to the Board’s factual findings, but only if they are supported

       by substantial evidence. 6787 Steelworkers Hall, Inc. v. Scott, 933 N.E.2d 591, 595

       (Ind. Tax Ct. 2010). Evidence is substantial “‘if it is more than a scintilla and

       less than a preponderance or if it would be accepted as adequate to support a

       conclusion by a reasonable mind.’” Id. at 595 n.7 (quoting French Lick Twp. Tr.

       Assessor v. Kimball Int’l, Inc., 865 N.E.2d 732, 739-40 n.14 (Ind. Tax Ct. 2007)).

       The Court applies a de novo standard of review to the Board’s legal

       conclusions. 6787 Steelworkers, 933 N.E.2d at 595. In conducting the review,

       the Court will neither reweigh evidence nor assess witness credibility. Id.


                           II. Untimely Submission of Exhibit
[13]   Evansville Courier first argues that the Board erred by admitting into evidence a

       document submitted by the County that was not provided to Evansville Courier

       according to the requisite timeline.


[14]   The Indiana Administrative Code mandates that a party to an administrative

       appeal before the Board “must provide” copies of documentary evidence to all

       other parties at least five business days before the hearing. 52 Ind. Admin.

       Code 2-7-1(b)(1) (emphasis added). Failure to comply with this rule “may serve

       as grounds to exclude the evidence[.]” 52 I.A.C. 2-7-1(b)(f). This Court has

       explained as a general matter that the purpose of the discovery rules is “to allow

       Indiana Tax Court | Opinion 02T10-1611-TA-55 | June 5, 2017              Page 11 of 20
       a free exchange of fact information and to permit each party to prepare its case

       for trial without concerns about trial by surprise or ambush.” Brandenburg

       Indus. Serv. Co. v. Ind. Dep’t of State Revenue, 26 N.E.3d 147, 152 (Ind. Tax Ct.

       2015). And indeed, our Supreme Court has unequivocally and “consistently

       rejected a ‘gaming view’ of the litigation process.” Outback Steakhouse of Fl., Inc.

       v. Markley, 856 N.E.2d 65, 75 (Ind. 2006).


[15]   It is undisputed that the County failed to provide a copy of its exhibit criticizing

       Venisnik’s appraisal at least five business days before the hearing. The County

       argued, and the Board ultimately held, that because the evidence was rebuttal

       evidence, its disclosure was not required.


[16]   The Court disagrees. It is well established that “the nondisclosure of a rebuttal

       witness is excused only when that witness was unknown and unanticipated;

       known and anticipated witnesses, even if presented in rebuttal, must be

       identified pursuant to a court order, such as a pre-trial order, or to a proper

       discovery request.” McCullough v. Archbold Ladder Co., 605 N.E.2d 175, 179

       (Ind. 1993) (emphasis added). Here, the County was well aware of the nature

       of Venisnik’s testimony and arrived at the hearing armed with evidence to rebut

       that testimony. The exhibit in question was dated January 20, 2016, and the

       hearing occurred on January 26, 2016, meaning that this exhibit was known,

       anticipated, and actually available to be disclosed to Evansville Courier within

       the requisite timeline. Appellant’s App. p. 774-90. The County’s failure to do

       so constitutes precisely the type of “gotcha” litigation that Indiana courts abhor.

       Under these circumstances, the admission of this exhibit was erroneous.

       Indiana Tax Court | Opinion 02T10-1611-TA-55 | June 5, 2017               Page 12 of 20
                                 III. Abnormal Obsolescence
                                       A. General Principles
[17]   Generally, all property located in the State of Indiana is required to be taxed as

       either personal or real property. 50 Ind. Admin. Code 4.2-1-3. With respect to

       personal property, a tax return must be filed in each taxing district where

       property has a tax situs subject to certain qualifications. 50 I.A.C. 4.2-4-2(a).


[18]   Taxpayers must record the cost of depreciable property, both real and personal,

       and use that cost in determining the value of the depreciable personal property

       subject to assessment. Id. Ordinary depreciation of personal property is

       calculated pursuant to a set schedule contained in the Indiana Administrative

       Code. This schedule automatically reflects all adjustments for Indiana property

       tax purposes except for abnormal obsolescence. 50 I.A.C. 4.2-4-8.

       Consequently, Indiana taxpayers are not allowed adjustments to personal

       property assessments for normal obsolescence.


               “Normal obsolescence” means the anticipated or expected
               reduction in the value of business personal property that can be
               foreseen by a reasonable, prudent businessman when property is
               acquired and placed into service. In general, it includes the
               expected, declining value through use, gradual decline in value
               because of expected technological improvements, the gradual
               deterioration or obsolescence through the mere passage of time,
               and the general assumption that such property will have a
               minimum value at the end of its useful life.


       50 I.A.C. 4.2-9-2


       Indiana Tax Court | Opinion 02T10-1611-TA-55 | June 5, 2017               Page 13 of 20
[19]   Indiana taxpayers are, however, allowed adjustments to personal property

       assessments for abnormal obsolescence.


               (a)      “Abnormal obsolescence” means that obsolescence which
                        occurs as a result of factors over which the taxpayer has no
                        control and is unanticipated, unexpected, and cannot
                        reasonably be foreseen by a prudent businessman prior to the
                        occurrence. It is of a nonrecurring nature and includes
                        unforeseen changes in market values, exceptional
                        technological obsolescence, or destruction by catastrophe
                        that has a direct effect upon the value of the personal
                        property of the taxpayer at the tax situs in question on a
                        going concern basis.


               (b)      An example of unforeseen change in market value is a
                        government ban on the sale of a drug or chemical due to a
                        new discovery or determination may cause that item or the
                        production equipment used to produce it to be abnormally
                        obsolete. A specific example of this would be cyclamate.
                        In this case the equipment used to produce it may be
                        eligible for abnormal obsolescence.


               (c)      . . . [A]bnormal obsolescence due to exceptional
                        technological obsolescence should be recognized to the
                        extent that it causes the subject property to be incapable of
                        use for current production or adaption to a different use.
                        The invention of a newer, more productive piece of
                        equipment which would produce a better quality item or
                        utilization of state of the art technology that produces
                        more efficiently at a lower cost of production does not
                        cause an older, currently used asset to be considered
                        abnormally obsolete. If the asset is still capable of performing
                        the function for which it was acquired, and is producing both on
                        and before the assessment date, no adjustment shall be allowed.
                        The use of historical cost, short useful life, and accelerated

       Indiana Tax Court | Opinion 02T10-1611-TA-55 | June 5, 2017                    Page 14 of 20
                        depreciation in developing the prescribed true tax value
                        percentages result in an equitable assessment on the
                        property in question.


       50 I.A.C. 4.2-9-3 (emphases added). Abnormal obsolescence “includes the

       impairment of desirability and usefulness brought about by new inventions and

       improved processes for production, or the impairment of functional capacity or

       efficiency if the inadequacy or overadequacy causes a loss in value and has

       made the property incapable of continued use for a prolonged period during the

       assessment year.” 50 I.A.C. 4.2-4-8(a). The term “abnormal obsolescence”

       must be strictly construed and “limited to a situation where unforeseen changes

       in market values, exceptional technological obsolescence, or destruction by

       catastrophe occurs, providing that such events have a direct effect upon the

       valuation of the depreciable personal property of the taxpayer . . . .” 50 I.A.C.

       4.2-4-8(c).


[20]   Abnormal obsolescence “should be recognized to the extent that the property

       qualifies for the adjustment and the taxpayer is able to substantiate the facts,

       circumstances, and amount of the claim in order to properly determine the true

       tax value of the subject property.” 50 I.A.C. 4.2-9-4. If a taxpayer substantiates

       a claim for abnormal obsolescence, an adjustment “will be allowed.” 50 I.A.C.

       4.2-9-6.


                                       B. The Printing Press
[21]   Evansville Courier contends that the Board erred by concluding that Evansville

       Courier failed to establish the abnormal obsolescence of the Printing Press and
       Indiana Tax Court | Opinion 02T10-1611-TA-55 | June 5, 2017                 Page 15 of 20
       its related equipment. As noted above, the Board based this conclusion on two

       primary factors: (1) Evansville Courier “failed to point to a single, specific,

       non-recurring triggering event,” such as 9/11, justifying a determination of

       abnormal obsolescence; and (2) the Printing Press is still operable and has five

       years remaining of predicted useful service life. Appellant’s App. p. 106.


[22]   There are two possible ways in which the Printing Press could qualify for an

       abnormal obsolescence adjustment: unforeseen changes in market values or

       exceptional technological obsolescence. Turning first to the latter, the

       Administrative Code requires that to make a successful claim of exceptional

       technological obsolescence, the personal property at issue must not be “still

       capable of performing the function for which it was acquired” and must not still

       be “producing both on and before the assessment date[.]” 50 I.A.C. 4.2-9-3(c).

       Here, it is undisputed that the Printing Press was still capable of performing the

       function for which it was acquired, was still producing output both on and

       before the assessment dates, and still had at least five years left of continuing

       functionality. Appellant’s App. p. 106 (noting that Venisnik’s own testimony

       established that there were “five years remaining of predicted useful service life”

       and that the Printing Press “continues to perform the purpose for which it was

       purchased twenty-five years ago”). Consequently, the plain terms of the

       Indiana Administrative Code mandate that Evansville Courier is not entitled to

       an abnormal obsolescence adjustment for the reason of exceptional

       technological obsolescence, and the Board did not err in so holding.




       Indiana Tax Court | Opinion 02T10-1611-TA-55 | June 5, 2017                Page 16 of 20
[23]   The other possible way in which Evansville Courier could establish abnormal

       obsolescence was to show unforeseen changes in market values of the personal

       property at issue. The example of unforeseen changes in market values

       provided in the Indiana Administrative Code is the case of a pharmaceutical

       manufacturer that produces a drug that is suddenly banned in the United States,

       rendering the company’s equipment used to produce that drug abnormally

       obsolescent. 50 I.A.C. 4.2-9-3(b). The examples provided by the Board in the

       instant case involved two corporate entities that suffered a substantial decline in

       business following the 9/11 terrorist attacks. Appellant’s App. p. 106.


[24]   Evansville Courier directs our attention to the evidence in the record tending to

       show a dramatic decline in the printed newspaper industry over the past

       decade. According to Evansville Courier, this precipitous drop in subscribers

       and circulation is directly linked to new technology and inventions, including

       smartphones, high speed internet, and social media such as Facebook and

       Twitter. Additionally, newspapers compete with 24-hour news coverage on

       cable news networks and also compete for classified advertising dollars with

       online services such as Craigslist.


[25]   As noted above, to qualify as abnormally obsolescent, the obsolescence must be

       unanticipated, unexpected, unforeseen, and non-recurring. Even if the Court

       agrees solely for argument’s sake that the dramatic change in the newspaper

       industry over the past decade has been unanticipated, unexpected, and

       unforeseen, it is far more difficult to conclude that it is “non-recurring.” That

       term is not defined in the Indiana Administrative Code. Merriam-Webster

       Indiana Tax Court | Opinion 02T10-1611-TA-55 | June 5, 2017               Page 17 of 20
       Dictionary defines “nonrecurring” as follows: “nonrecurrent; specifically:

       unlikely to happen again—used of financial transactions that affect a profit and

       loss statement abnormally.” Merriam-Webster Dictionary, at

       https://www.merriam-webster.com/dictionary/non-recurring (last visited June

       1, 2017). “Nonrecurrent,” in turn, is defined as “not recurring,” and “recur” is

       defined in relevant part as “to occur again after an interval: occur time after

       time.” Merriam-Webster Dictionary, at https://www.merriam-

       webster.com/dictionary/recurring (last visited June 1, 2017). In other words,

       something that is “non-recurring” is a unique event that is unlikely to occur

       again.


[26]   In our view, an ongoing downward trend of an industry that has been occurring

       slowly over the course of a decade, and is still happening, cannot logically be

       defined as “non-recurring.” It is more properly called “ongoing,” or “currently

       occurring.”


[27]   We acknowledge the administrative rule regarding “adjustment for

       obsolescence,” which states that abnormal obsolescence “includes the

       impairment of desirability and usefulness brought about by new inventions and

       improved processes for production.” 50 I.A.C. 4.2-4-8(a). At first blush, it may

       seem that this language, which implies a possibility of gradualness, conflicts

       with the requirement that the obsolescence be non-recurring. On closer

       examination, however, the language can be reconciled.




       Indiana Tax Court | Opinion 02T10-1611-TA-55 | June 5, 2017              Page 18 of 20
[28]   Initially, it is important to note that Rule 4-8 refers to the definition of abnormal

       obsolescence found in Rule 9-3, which includes the “non-recurring”

       requirement. Id. Furthermore, Rule 4-8 requires that the term “abnormal

       obsolescence” be strictly construed. Id. at -8(c). Finally, the Court believes that

       an impairment of desirability and usefulness brought about by new inventions

       and improved processes can, in fact, result from a non-recurring event and be of

       a non-recurring nature. The invention of the VHS videocassette system would

       be such an event from the perspective of companies manufacturing Betamax

       systems. The invention of MP3 players would be such an event from the

       perspective of companies manufacturing compact discs and compact disc

       players. There are undoubtedly countless other examples of industries facing a

       dramatic drop in the value of personal property because of a single new

       invention or a single new process development.


[29]   Here, unfortunately for Evansville Courier and the other struggling newspapers

       around the country, a whole host of events, inventions, and developments have

       taken place to cause the gradual decline of the industry. As noted above,

       among other things, we can look to high speed internet, smartphones, 24-hour

       television news, Facebook, Twitter, internet-only news providers such as

       Buzzfeed, etc. There is no one, non-recurring event on which blame can be

       placed. Under these circumstances, Evansville Courier has not established that

       the obsolescence of its property is non-recurring in nature. Therefore, the

       Board did not err by finding that Evansville Courier has not met its burden of

       establishing a prima facie case or by denying its petitions.


       Indiana Tax Court | Opinion 02T10-1611-TA-55 | June 5, 2017               Page 19 of 20
[30]   The judgment of the Board is affirmed.


[31]   SO ORDERED this 5th day of June 2017.




                                                           __________________________________
                                                           John G. Baker, Special Judge
                                                           Indiana Tax Court



       DISTRIBUTION:

       Joshua C. Neal, William A. Ramsey, Winston Lin, and Jessica R. Gastineau




       Indiana Tax Court | Opinion 02T10-1611-TA-55 | June 5, 2017                   Page 20 of 20
