Laws, Regulations & Annotations
Business Taxes Law Guide – Revision 2013
Sales And Use Tax Court Decisions
United States Lines, Inc. v. State Board of Equalization . . . (1986)
Taxpayer erected two cranes on land belonging to the Port of Oakland. After the cranes were erected, taxpayer sold the cranes to the port, and leased the cranes back from the port together with the land on which the cranes had been erected for $1 per year. Taxpayer and the port stipulated by contract that the actual purchase price of the cranes was $3.68 million, but the port did not pay any cash for the cranes. Instead, taxpayer agreed that it had received valuable consideration for the sale of the cranes in the leaseback arrangement plus related agreements. Taxpayer contended the sale of the cranes was a sale of real property fixtures, not subject to sales tax. The trial court granted summary judgment in favor of the Board.
The court of appeal affirmed. The court held that the cranes were tangible personal property in the hands of the taxpayer, even though after the transfer the cranes became real property fixtures annexed to the port's property. Thus, the sale of the cranes to the port was a taxable transfer of tangible personal property. The court also held that since the taxpayer acknowledged receipt of valuable consideration in lieu of cash under the crane leaseback and other related agreements, the Board was correct in assessing tax based on the actual purchase price stated under the terms of the crane purchase agreement. United States Lines, Inc. v. State Board of Equalization (1986) 182 Cal.App.3d 529.