NAC361.408. Indicators of value: Cost approach; income approach; market or stock and debt approach; reconciliation.

     1. The cost approach consists of that cost of all operating assets subject to the ad valorem property tax pursuant to NRS 361.315 and 361.320 that most closely reflects the taxable value of these operating assets.

     2. For the income approach, the adjusted net operating income either after or before an allowance for depreciation and federal income tax will be capitalized (converted to value) through the use of an appropriate capitalization rate for the industry group. The income of the property to be capitalized will be determined as follows:

     (a) With regard to those industry groups in which annual earnings are reasonably stable, the most recent year’s earnings may be capitalized.

     (b) For those industry groups in which annual earnings vacillate frequently over a period of years, an average of past earnings may be used.

     3. The market approach or stock and debt method of valuation is a technique that is applicable to valuing railroads and utilities, and it results initially in an enterprise value which encompasses the entire unit. The stock and debt indicator will be determined by multiplying either the average monthly, quarterly or annual high and low market price quotations of all the securities which are actively traded in the market place including common stock, preferred stock and long-term debt, by the number of shares outstanding at the end of the year. With regard to those securities which are not actively traded, computations of the present worth of the income flows may be made for the determination of their value. To this amount will be added short-term debt, together with other applicable adjustments. From this amount will be deducted the nonoperating and nonassessable assets for the indication of the value of those assets encompassed within NRS 361.315 and 361.320.

     4. A review will be made of the one or more available indicators of value. These indicators of value will then be reconciled to derive the final estimate of value.

     [Tax Comm’n, Property Tax Reg. part No. 15, eff. 10-30-79; A 10-15-81]—(NAC A 9-30-88; R085-98, 11-23-98)