Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2018

Sales and Use Tax Annotations

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110.0000 ANIMAL LIFE AND FEED—Regulation 1587

Annotation 110.0003


110.0003 Allocation of Purchase Price to Unborn Foals. A company who is in the business of breeding, racing and selling horses, purchased two mares with unborn foals from an out-of-state retailer for a lump sum of $225,000. The mares were purchased for breeding purposes in California. The company contends that the foals were purchased for resale so that only $125,000 was actually paid for the mares.

A portion of the purchase price of the mares cannot be allocated to the unborn foals on the basis that the foals are to be resold. The contract of the sale did not separately state a value for the foals, nor provides for a refund of any portion of the purchase price if the foals were born dead. The mares were valuable in the condition of being with foal. Accordingly, the full purchase price paid for the mares is subject to use tax with no allocation for the unborn foals. 8/20/92.