Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2018

Sales And Use Tax Court Decisions

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Campbell Industries v. State Board of Equalization . . . (1985)

Ferry Boats Principally Used in Intrastate Transportation Are Not Tax Exempt

Taxpayer sold three ferry boats to be used for passenger service between Marin County and San Francisco. A survey determined that the ferry boats carried at least one passenger using the ferry service as a part of interstate travel on less than one percent of the voyages. The Board assessed sales tax on the sales of the ferry boats. Taxpayer sued for refund of the taxes paid.

The Court of Appeal held that in order to qualify for the tax exemption provided by Revenue and Taxation Code section 6368, taxpayer had the burden of showing that the ferry boats were principally used in the interstate transportation of passengers for hire. Also, the Board's long-standing administrative interpretation, extending the principal use standard to watercraft expressly described in Sales and Use Tax Regulation 1594(a)(1) (tugboats and ferry boats), was entitled to particular consideration, and refuted taxpayer's argument that a more relaxed rule applies to those watercraft. Campbell Industries v. State Board of Equalization (1985) 167 Cal.App.3d 863.