Laws, Regulations & Annotations
Business Taxes Law Guide – Revision 2017
Sales and Use Tax Annotations
185.0000 CONSIGNEES AND LIENORS OF TANGIBLE PERSONAL PROPERTY FOR SALE—Regulation 1569
185.0013 Court-Ordered Sale in an Anti-Trust Suit. The final judgment in an anti-trust suit ordered a taxpayer to divest itself of certain facilities and business activities within 24 months. If the divestitures were not accomplished within 24 months, the taxpayer was required to place control of the property in a trustee who would sell the property subject to approval of the government. The taxpayer retained the right to object to the court to the terms and conditions of the sale. The taxpayer failed to sell the property within the 24 months and the court ordered the taxpayer to irrevocably convey the property to a trustee. The trustee was granted full authority to dispose of the property subject to the supervision of the court. The taxpayer retained the right to object to the court to the details of any contemplated sale. The property was ultimately sold and the sale was approved by the court. The proceeds were transferred by the trustee to a bank in reduction of the taxpayer's indebtedness to the bank.
The status of the court-appointed trustee in the above situation is not the same status as held by a court-appointed trustee in a bankruptcy case. The bankruptcy trustee has powers as defined by statutes in the Bankruptcy Act. The bankruptcy trustee is trustee primarily for the creditors rather than for the bankrupt owner. The trustee in this situation is in effect a sales agent or broker for the taxpayer despite the facts that the court appointed the trustee and the taxpayer conveyed the property to the trustee. All tangible benefits of the final sale accrued to the taxpayer. For sales and use tax purposes, the relationship of the trustee and the taxpayer was that the trustee was the agent of the taxpayer for purposes of selling the property subject to approval of the court. The taxpayer is therefore liable for tax on the sale of those assets which are tangible personal property, other than inventory, used in a business requiring the holding of a seller's permit. 6/23/78.