Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2018

Sales and Use Tax Annotations

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Annotation 330.2290


330.2290 Intent of Purchaser. Taxpayer purchased tangible personal property in another state. Tax was paid with respect to the purchase in the state in which the purchase was made. Taxpayer leased the equipment to customers in the other state for a substantial period of time. Upon termination of the lease the taxpayer transported the property to California with the intention of placing the property in lease service here. The property was brought into this state more than 90 days after the date of purchase. The property was then placed in rental service in this state.

The leasing of the property is a "sale" by taxpayer and a "purchase" by taxpayer's lessee and is taxable. Taxpayer has no election to pay use tax measured by the purchase price of the property since the property was not purchased for use in this state.

Where the property is in rental service outside this state for more than 90 days before it is brought here, it will be regarded as having been purchased for use in this state only if it can be specifically established that at the time the property was purchased the purchasers intended to utilize it in this state. If, for example, a taxpayer purchased certain equipment to be utilized in the performance of a contract to be performed in this state, but the equipment was first utilized outside this state due to a delay in the commenceme nt of the California contract, then the taxpayer could pay tax measured by the sales price to him of the equipment even though the equipment might have been utilized for more than 90 days in another state. The tax would have to be paid with the return for the period during which the equipment was first placed in rental service in this state. The taxpayer could then take any credit allowed by Revenue and Taxation Code section 6406. 4/28/75; 11/26/71.