JWB C.S.H.B. 495 75(R)BILL ANALYSIS WAYS & MEANS C.S.H.B. 495 By: Horn 3-17-97 Committee Report (Substituted) BACKGROUND Section 23.12, Tax Code, specifies how a businesses' inventory is appraised for tax purposes. Currently, a businesses' inventory is appraised at the market value for which it would sell to a purchaser who would continue the business. The lack of data associated with this method has led many companies to use unique methods of valuation that may conflict with the methods used by appraisal districts. PURPOSE This bill would change the method of appraisal for valuing a businesses' inventory. RULEMAKING AUTHORITY It is the committee's opinion that this bill does not expressly grant any additional rulemaking authority to a state officer, department, agency or institution. SECTION BY SECTION ANALYSIS SECTION 1.Amends Section 23.12(a), Tax Code, to define market value of inventory as the cost to the owner plus, in the case of a manufacturer, the cost of placing the property in its current condition, less accrued physical, functional, and economic obsolescence. SECTION 2.Effective date: January 1, 1998; The change in law made by this Act applies only to an appraisal of an inventory for ad valorem tax purposes for a tax year that begins on or after the effective date of this Act. SECTION 3.Emergency clause. COMPARISON OF ORIGINAL TO SUBSTITUTE H.B. 495 defines market value of inventory as price determined in accordance with generally accepted accounting practices. C.S.H.B. 495 defines market value of inventory as the cost to the owner plus, in the case of a manufacturer, the cost of placing the property in its current condition, less accrued physical, functional, and economic obsolescence.