OAR 411-070-0375
Depreciation Basis
(1)
Purchase of a Nursing Home:(a)
New Facility — The depreciation basis of a new facility must be the historical cost of building the facility, including preparation for use, or the purchase price from an unrelated organization not to exceed the fair market value, including preparation for use, less salvage value;(b)
Ongoing Facility — The depreciation basis of the purchase of an ongoing facility from an unrelated organization is limited to the lower of the following:(A)
The allowable acquisition cost of such asset to the first owner of record on or after July 18, 1984; or(B)
The acquisition cost of such asset to the new owner.(c)
To properly provide for costs or valuations of fixed assets, an appraisal by an appraisal expert will be required if the provider has no historical cost records, or has incomplete records of depreciable fixed assets, or purchases a facility without designation of purchase price for the classification of assets acquired. The appraisal is subject to the approval of the Department. In any case, the Department may require such an appraisal to establish the fair market value of the provider assets;(d)
If the purchase is from a related organization, the cost basis is the lower of the cost basis of the related organization or the cost basis as determined in subsections (b) and (c) of this section, less depreciation as determined by the provisions of these rules.(2)
The depreciation basis of other assets must be the historical cost to the provider from an unrelated organization plus set-up costs, less salvage value. In the case of a trade-in, the historical cost will consist of the sum of the book value of the trade-in plus the cash paid. In a case where the asset is purchased from a related organization, the depreciation basis must not exceed the asset’s book value to the related organization as determined under the provisions of this guide.(3)
The depreciation basis of donated assets, defined as an asset acquired without making any payment for it in the form of cash, property, or services, must be the lessor of:(a)
Fair market value at the date of donation adequately documented in the provider’s records or by appraisal by an appraisal expert, less salvage value; or(b)
If from a related organization, the depreciation basis must be the lesser of:(A)
Fair market value; or(B)
The depreciation basis the related party had or would have had for the asset under the program.
Source:
Rule 411-070-0375 — Depreciation Basis, https://secure.sos.state.or.us/oard/view.action?ruleNumber=411-070-0375.