Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2018

Sales and Use Tax Annotations

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Annotation 280.1090

280.1090 Samples and Donations of Wine. A taxpayer purchases bottles, corks, labels, and foil under a resale certificate. The property is fabricated into containers for wine. Some bottles of wine are given away as samples or donated to organizations by shipping them out of state.

Since the containers are given away and not sold, California has nexus to tax the taxpayer's use of these containers as self-consumed tangible personal property. The taxpayer makes a gift of the containers and their contents within this state. To perfect a gift, there had to have been delivery. Delivery occurred in this state when the company deposited the containers into the possession of an independent shipper for transportation to the donee. Such delivery is constructive delivery and acceptance of the gift is implied. Burkett v. Doty (1917) 32 Cal.App. 337. Use tax is due on the purchase price of the components of containers used to ship the samples and donations. 7/31/90.