Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2018

Sales And Use Tax Court Decisions

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Santa Fe Energy Co. v. State Board of Equalization . . . (1984)

Sale of Assets Is Taxable when Seller is Required to Hold Seller's Permit

A corporation engaged in the exploration, development, and production of crude oil sold its assets. Prior to the sale of its assets, the corporation had neither sold tangible personal property at retail nor consumed any of the crude oil it produced. Rather, all the crude oil it produced was sold for the purpose of refining or processing into gasoline, fuel oil, or other petroleum products.

The Board imposed sales tax on the corporation's sale of its assets. The purchaser of the assets paid the tax and filed suit for refund. The trial court granted judgment in favor of the Board.

The court of appeal affirmed. It held that the sale of the assets was subject to sales tax because the sale was a retail sale, and the corporation was a "seller" under Revenue and Taxation Code section 6014 since the crude oil it sold was suitable for retail sale. It was irrelevant that the crude oil was not sold at retail but was instead sold for processing into other petroleum products. Since the sale of the assets was by a seller required to hold a seller's permit, the sale was not an exempt occasional sale. Santa Fe Energy Co. v. State Board of Equalization (1984) 160 Cal.App.3d 176.