Laws, Regulations & Annotations
Business Taxes Law Guide – Revision 2013
Sales and Use Tax Annotations
330.0000 LEASES OF TANGIBLE PERSONAL PROPERTY—IN GENERAL—Regulation 1660
(a) IN GENERAL
330.2244 Extensions of Lease Periods. Under a lease of tangible personal property the lessee has the option at the end of the lease of surrendering the property, purchasing the property for 10% of the purchase price, or continuing to lease it. Originally, the lessor purchased the property in California tax paid and leased it in the form in which it was acquired. Since the leases are not sales at inception or continuing sales, no tax applies to rental payments under an extension of the lease, provided that the extension of the lease does not result in the lessee acquiring title at the end of the extension or purchasing the property at the end of the extension for a nominal price. (Regulation 1660(a)(2)(A).) If the lessee exercises his option to purchase, the sale is subject to tax. 11/10/94.