Laws, Regulations & Annotations
Business Taxes Law Guide – Revision 2012
Sales And Use Tax Court Decisions
Coast Elevator Co. v. State Board of Equalization . . . (1986)
Taxpayer sold and installed elevator systems. Taxpayer purchased component fixtures and, at its factory, assembled the components into the elevators prior to installing the elevators at the jobsite. The Board determined that taxpayer was a manufacturer of fixtures and assessed sales tax on the labor and overhead attributable to the factory assembly of the components. Taxpayer contended that it was the retailer of the component fixtures, and the factory labor to affix the components to other components of the elevator system was nontaxable installation labor.
The court of appeal held in favor of the Board. The court held that the Board's Regulation 1521 (Construction Contractors) correctly applies tax to assembly labor which occurs before the affixation of fixtures to real property. Labor is properly regarded as taxable fabrication labor when, at the factory or at the jobsite, component fixtures are assembled into other component fixtures before the completed elevator system is finally installed as an attachment to real property. Coast Elevator Co. v. State Board of Equalization (1986) 186 Cal.App.3d 206.