Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2018

Sales And Use Tax Court Decisions

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L. A. J., Inc. v. State Board of Equalization . . . (1974)

Board Classification of Drapes as Tangible Personal Property Upheld

Plaintiff, who sold and installed custom drapes to builders of apartment houses pursuant to lump-sum contracts, sought a refund of tax. Tax had been assessed on the basis that the drapes were tangible personal property, with the tax being measured by the total sales price. Taxpayer asserted that the drapes were fixtures, in which case only the cost of the material used in the drapes would be subject to tax. The trial court classified the drapes as fixtures, ignoring the classification made by the Board.

On appeal, the court held that the trial court had no authority to disregard the Board's classification of the drapes as tangible personal property in the absence of a finding that the classification was arbitrary or capricious, or had no reasonable or rational basis. The trial court had made no such finding, nor could it have done so in light of the testimony at the trail. The court held that plaintiff had failed to carry its burden of proof that the classification was unreasonable. The uncontradicted evidence supported the conclusion that there was a reasonable basis for the Board's classification. The trial court was thus directed to enter judgment for the Board. L. A. J., Inc. v. State Board of Equalization (1974) 38 Cal.App.3d 549.