Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2018

Sales And Use Tax Court Decisions

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Industrial Asphalt v. State Board of Equalization . . . (1992)

A Sale Occurs when a Commencing Partnership Assumes the Liabilities of Its Partners in Exchange for Tangible Personal Property

The taxpayers formed a partnership and transferred assets to the partnership, including tangible personal property. The partnership assumed the liabilities of the taxpayers. The issue was whether the partnership's assumption of liabilities was consideration for the assets transferred to the partnership.

The court of appeals held that assumption of liabilities is consideration, and therefore, a sale occurred. Under Regulation 1595(b)(4), the transaction was subject to tax. Industrial Asphalt v. State Board of Equalization (1992) 5 Cal.App.4th 1237.