In a pending precedential decision, the California Office of Tax Appeals (OTA) held that the California Department of Tax and Fee Administration (CDTFA) is bound to follow its own regulation and could not rely on its audit manual to disregard that regulatory authority. Regulation 1595 provides that the agency will use “book value” as the selling price of tangible personal property for sales and use tax purposes where parties to the sale of a business do not otherwise agree to a selling price. The regulation also sets forth how to determine book value. However, CDTFA argued that book value is unreliable in this instance because it permitted an accelerated depreciation method and thus did not provide a reasonable indication of the true value of the taxpayer’s assets. As authority for rejecting the regulatory derived book value, CDTFA argued that it is “bound to follow” its audit manual, which instructs that an auditor may disregard book value and instead value property based on “true value” under certain circumstances. Disagreeing with CDTFA, OTA held that CDTFA is bound by its own regulation because there are no provisions in the regulation that permit a rebuttal or rejection of the regulatory presumption. And thus, CDTFA may not turn to other valuation methods when book value is available. OTA further concluded that the audit manual had no precedential value in an OTA appeal.