Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2012

Sales And Use Tax Court Decisions

A    B    C    D    E    F    G    H    I    J    K    L    M    N    O    P    R    S    T    U    V    W    Y


Northrop Corporation v. State Board of Equalization . . . (1980)

Taxpayer Sold Tooling to Purchaser Even Though Legal Title Was Retained as Security

Northrop entered into a contract with an airplane manufacturer to manufacture certain fuselage and wing fairing parts for model 747 airplanes. The contract required Northrop to use certain specially designed tooling it either fabricated or purchased. The Board assessed tax on Northrop's sale of the tooling, and Northrop brought an action to recover the tax. The court of appeal held that there was a sale by Northrop of the tooling, notwithstanding the fact that the contract provided for retention of legal title to the tooling by the seller as security for the purchase price of the parts sold.

The provisions of the sale agreement gave the buyer almost absolute control over the use and disposition of the tooling, including an irrevocable power of attorney from the seller to execute in its name any documents appropriate to transfer of the tooling. Northrop Corporation v. State Board of Equalization (1980) 110 Cal.App.3d 132.