Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2013
 

Sales and Use Tax Annotations


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G

295.0000 GROSS RECEIPTS

Annotation 295.0765

(b) ASSUMPTION OR CANCELLATION OF INDEBTEDNESS

295.0765 Cancellation of Contract Prior to Deliveries. A taxpayer contracts to fabricate and sell tangible personal property to a customer. At the completion of the fabrication it is found that the property is not usable for the purpose for which it was intended. The contract is canceled, but the customer reimburses the taxpayer for labor costs incurred in the fabrication. Since no tangible property was transferred, there was no sale and there is no tax unless the contract provided for transfer of title to the customer prior to delivery. The taxpayer is regarded as the consumer of all property used on the contract. 12/29/93.