Laws, Regulations & Annotations
Business Taxes Law Guide – Revision 2016
Sales and Use Tax Annotations
325.0000 INTERSTATE AND FOREIGN COMMERCE—Regulation 1620
(c) SHIPMENTS FROM CALIFORNIA TO POINTS OUTSIDE STATE
(2) Delivery to Purchaser in State
325.0664.150 Delivery to Foreign Purchaser in California. An aircraft firm contracted with the United States to convert four piston aircraft to prop jet aircraft. The aircraft were delivered and allowed as an exempt sale to the United States.
One of the aircraft caught fire in Canada, but essential parts including the engine and props were salvaged. The Canadian government contracted directly with the aircraft firm to convert another piston aircraft into a prop jet aircraft using the salvaged parts. The converted plane was delivered to the Canadian government in California and flown to Canada.
The second contract is not an extension of the initial contract with the United States. The sale by the aircraft firm to the Canadian government is subject to tax. The fact that the parts furnished by the repairer were removed from the state does not make the transaction exempt as a sale in interstate or foreign commerce. The exemption for property sold for delivery to a ship or airplane for transportation out of the country does not extend to the removal of the very items sold when that removal is accomplished under the property's own power. 5/28/68.