Casino Tax News: Casino’s Complimentary Meals Are Not Subject to Sales or Use Tax.

On March 27, 2008, the Nevada Supreme Court ruled that complimentary meals provided to patrons and employees of casinos are not subject to Nevada’s sales tax or use tax. Prior to this holding, casinos were required to pay “use tax” on complimentary meals. Below is a summary of the court’s opinion.

Nevada imposes a sales tax on the “retail sale of tangible personal property . . . .” When an item “escapes” sales tax, Nevada law imposes a use tax when the item is used, stored or consumed. Article 10, Section 3(A) of the Nevada Constitution provides for an exemption of “food for human consumption” from sales or use taxes. However, excluded from the definition of “food for human consumption” is “[p]repared food intended for immediate consumption.” The same types of provisions are found in NRS 372.284 and NRS 374.289. Prior to this decision, the casino, Sparks Nugget, Inc. (the “Casino”) paid no sales tax for its initial purchase of the food, but was required to pay a use tax when the food was complimentarily served to patrons or employees.

The court held that the initial purchase of food by the Casino was properly exempt from sales tax as “food for human consumption” that was not “prepared food intended for immediate consumption.” The later use of the food to provide complimentary meals was not subject to a use tax because the Casino’s “‘use’ did not follow an otherwise taxable purchase that had ‘escaped’ sales tax liability.” The Casino did not “escape” liability; rather, the Casino was “exempt” from liability. Nevada’s Constitution clearly “exempts all food for human consumption” unless the food is “‘prepared food intended for immediate consumption’ at the time it was sold.”

The court pointed out that the Casino is entitled to a refund for taxes paid on the complimentary meals in question. A copy of the opinion may be found on the Nevada Supreme Court’s website at http://www.nvsupremecourt.us/documents/advOpinions/124NevAdvOpNo15.html.

Questions or Additional Information
With questions or requests for additional information, please contact Eric Willis at 702.792.7000 or ewillis@kkbrf.com or John Brewer at 702.792.7000 or jbrewer@kkbrf.com.

Our client alerts are intended for informational purposes only. Nothing in this client alert is to be considered as either creating an attorney-client relationship between the reader and Kummer Kaempfer or as rendering of legal advice. Readers are responsible for obtaining such advice from their own legal counsel.

No client or other reader should act or refrain from acting on the basis of any information contained in this client alert without seeking appropriate legal or other professional advice on the particular facts and circumstances at issue.

Recent Changes to the Probate Code are an even better reason to have a Will or Trust. In their absence your estate may go to nieces and nephews in greater shares than you might expect.

Changes made to Nevada law during the last Nevada Legislative Session include a change to NRS 134.060 for people that die without a Will or Trust, and are not survived by parents or offspring. In such cases, the Nevada laws on intestate succession (i.e. death without a Will or Trust) dictate how the estate is to be distributed.

Prior to the law change, the estate would be distributed to the brothers or sisters of the decedent in equal shares. If any of those brothers or sisters had died first, but left heirs, then the share that would have gone to the deceased brother or sister would be divided equally among the heirs of that brother or sister. It would not affect the shares given to the living brothers or sisters. The principle of transferring the share to living heirs is known as receiving an estate “per stirpes,” or commonly in statutes, by “right of representation.”

In a simple example, suppose Joe died with no spouse, no children (no offspring) and no living parents, Joe’s siblings – Mable, Lucy and Jake would each take one-third. If Mable were predeceased, but had four kids, her kids would share Mable’s one-third.

However, NRS 134.060 was amended by Senate Bill 420 and the language “right ofrepresentation” was changed to “in equal shares, per capita”. Per capita means that all eligible recipients get an equal share. So in our example above, the estate would be split in six equal shares; one for Lucy, one for Jake, and one for each of Mable’s four kids reducing Joe’s siblings, Lucy and Jake’s share in half in favor of Joe’s nieces and nephews.

The Legislature has changed the effective distribution scheme among Joe’s siblings from one-third, one-third, one-third, to one-sixth, one-sixth, two-thirds. It is very unlikely that a person would intentionally designate their estate to go this way.

The stated intent of the proponents of SB 420 was simply to cut off the distribution of the estate at the niece and nephew level. The changed statute does do that, but it also, perhaps unintentionally, changes the percentages that each beneficiary receives. In reviewing the legislative testimony, it appears that the bill proponents did not realize that this change was being made as their examples to the legislative committee did not follow the plain language of the change to NRS 134.060. However, their intent is of little consequence since Courts do not look to legislative intent unless the language is
ambiguous. Here the language is not ambiguous. Indeed, a senior judge with over 30 years of experience presiding over estate matters confirmed that the language would not be read by him as ambiguous and thus would result in the six-way split in the above example.

There are other results under intestate succession that most people would not expect. For example if Joe had died leaving a spouse and four children, would you have guessed that his estate is split one-third to his spouse and two-thirds split equally among his children? Probably not.

What is the best course to take? Execute a Last Will and Testament, or better still, avoid the costs of probate by creating a Trust. Even the most simple of estate planning would avoid these problems and a host of others that the law dictates for those without Wills or without Trusts.

Questions or Additional Information
With questions or requests for additional information, please contact Steve Tackes at 775.884.8300 or stackes@kkbrf.com; Steve Pacitti at 702.792.7000 or spacitti@kkbrf.com; Alexis Michaud at 702.792.7000 or amichaud@kkbrf.com.

Our client alerts are intended for informational purposes only. Nothing in this client alert is to be considered as either creating an attorney-client relationship between the reader and Kummer Kaempfer or as rendering of legal advice. Readers are responsible for obtaining such advice from their own legal counsel.

No client or other reader should act or refrain from acting on the basis of any information contained in this client alert without seeking appropriate legal or other professional advice on the particular facts and circumstances at issue.

This alert is to advise clients of the Firm of the impending major updates to several Land Use Plans
in Clark County. As you know, Clark County is divided into planning areas. The land use map
for each planning area generally defines in broad categories the uses for land within that planning
area. Major updates to each planning area are done approximately every five years. The major update
process gives land owners the opportunity to request a change to the land use category currently
assigned to its property. It is important to note that a moratorium against nonconforming zone
changes will be imposed for two years after ratification of the major amendments to the land use
plans.

Presently, the County is in the process of a major update to theLoneMountainplanning
area. This planning area is generally located in the northwest part of the Las Vegas Valley along US
95 and shown in more detail here.

A community workshop regarding the major update to the Lone Mountain land use plan was held Tuesday,
March 4, 2008 from 5-8 pm at Mountain Crest Community Center. The March 4thcommunity workshop
unveiled the draft plan and residents and property owners were permitted to offer comments and suggestions
to the draft plan. There will be one additional community workshop and then the plan will be considered
through the public hearing process.

The public hearing process includes the following steps:

1. Review, comment and recommendation by the Lone Mountain Citizens
2. Advisory Council
3. Review, comment and recommendation by the Clark County Planning Commission
4. Review, comment and vote by the Clark County Board of County Commissioners
5. Confirmation by the Clark County Planning Commission

In addition to the Lone Mountain planning area, the County has commenced with a major update to the
land use plan for the South County planning area. This planning area is generally located in the
southeastern part of the County and shown in more detail by clicking on this link- http://gisgate.co.clark.nv.us/gisplot_pdfs/cp/scplu.pdf.

The South County planning area includes Sloan, Sandy Valley, Goodsprings, Jean, Stateline (Primm),
Nelson, Searchlight and CalNevAri. The update to the South County planning area is not as far along
in the process as Lone Mountain. The County is working on the draft plan and in the near future will
commence with community workshops. A community workshop will be held in Searchlight, in Boulder City
and at the Clark County Government Center.

In the summer of 2008, the County will commence with a major update to the land use plan for the Enterprise
planning area. This planning area is generally located in the southwest part of the Las Vegas Valley along I 15, I 215 and SR 160 (Blue Diamond) and shown in more detail by clicking here.
The process will follow the same steps as the Lone Mountain plan, with the exception of the location of the community workshops and the Enterprise Town Board reviewing, commenting and making a recommendation on the updated plan to the Clark County Planning Commission.

If you own property in any of these planning area and you are interested in requesting a change to the current land use plan category for your property, please contact our office to set up an appointment to discuss this matter further. Please contact us by telephone at (702) 792-7000.

On November 15, 2007, the SEC announced that it had adopted three significant rule changes including the following:

• Expand the category of companies which are eligible for the more lenient disclosure rules and integrating those rules into the set of rules and forms used by larger reporting companies.
• Shorten the holding period for resales of restricted securities under Rule 144 to six months from one year for reporting companies, allowing non-affiliates of reporting companies to resell after a six month holding period (subject only to the issuer satisfying the current public information requirement of Rule 144(c)), allowing non-affiliates of non-reporting companies to resell restricted securities without restriction after a one year holding period rather than the current two year period, and raise the threshold for affiliates filing Form 144 to 5,000 shares or $50,000 up from $10,000 or 500 shares.
• Provide an exemption from registration under the Securities Exchange Act of 1934 (but not the Securities Act of 1933) for compensatory employee stock options.

Small Business Issuers
The new rules replace the current “small business issuer” category which qualifies for the more lenient disclosure requirements with a new category of “smaller reporting companies.” The public float limit is increased to $75 million from $25 million.

Regulation S-B is eliminated and the disclosure rules moved into new sections Regulation S-K and Regulation S-X which will apply only to smaller reporting companies. The SB forms will also be phased out.

Rule 144 Amendments
Rule 144 is amended to shorten the holding period for restricted securities of reporting companies to six months from one year. In addition, non-affiliates of reporting companies can freely resell securities after a six month holding period subject only to the issuer satisfying the public information requirement of Rule 144(c). After one year, their resales are no longer subject to the public information requirement. Non-affiliates of non-reporting companies can also freely resell after a one year holding period.

These new holding periods are a substantial easing of the current requirements. The general holding period requirement for restricted securities was one year for affiliates and non-affiliates. After two years, non-affiliates could freely resell restricted securities. During the period between one year and two years, non-affiliates could resell but only subject to all of the requirements of Rule 144 including the volume limitations, manner of sale (i.e. brokers’ transactions), and filing of Form 144. One additional effect of the rule amendments is that non-affiliates will no longer be required to file Rule 144 because at the close of the applicable holding periods for non-affiliates, they can resell freely (subject only to the public information requirement for the six month holding period as discussed above).

Affiliates who resell restricted securities will remain subject to substantially the same requirements of Rule 144 as previously in effect, except, as noted above, affiliates of reporting companies can sell after a six month holding period and the following additional changes. The threshold for filing Form 144 is increased to 5,000 shares or $50,000 from 500 shares or $10,000. The manner of sale requirements for equity securities is revised and they are eliminated for debt securities and the volume limitations for debt securities are relaxed. Also, the resale provisions of Rule 145(d) (applicable to shares acquired in mergers and certain other corporate transactions) are revised.

Exemption of Compensatory Employee Stock Options from Registration under the Securities Exchange Act of 1934 (”Exchange Act”)
Amendments to Rule 12h-1 will provide an exemption from registration under Section 12(g) of the Exchange Act for compensatory employee stock options. Non-reporting companies which meet the thresholds for Exchange Act registration based on the number of holders of such options but not the number of stockholders will now be exempt from registration. Similarly, companies which are already reporting under the Exchange Act will not have to register compensatory employee stock options under the Exchange Act.

It is important to note that these exemptions are only applicable to registration under the Exchange Act. Registration under the Exchange Act typically subjects a company to the reporting requirements, proxy rules, Section 16, and various other requirements. However, the new rules do not affect the requirements of the Securities Act of 1933. The issuance of the options and the offer and sale of the underlying stock must either be registered or qualify for an exemption from registration under the Securities Act of 1933.

Effective Dates
The effective dates of the new rules are as follows:

Small Business Issuers—30 days after publication in the Federal Register

Rule 144—60 days after publication in the Federal Register

Employee Stock Options—upon publication in the Federal Register

Explanatory Note
This alert is only a simplified overview and not a comprehensive description of the new rules. In addition, the full text of the releases adopting these rules including the text of the rules is not yet available and it likely will affect the information provided in this alert.

Questions or Additional Information
With questions or requests for additional information, please contact Neal A. Klegerman at 702.792.7025 or nklegerman@kkbrf.com; or John C. Jeppsen at 702.792.7000 or jjeppsen@kkbrf.com.

Our client alerts are intended for informational purposes only. Nothing in this client alert is to be considered as either creating an attorney-client relationship between the reader and Kummer Kaempfer or as rendering of legal advice. Readers are responsible for obtaining such advice from their own legal counsel.

No client or other reader should act or refrain from acting on the basis of any information contained in this client alert without seeking appropriate legal or other professional advice on the particular facts and circumstances at issue.