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
330.2314 Leasing of Motion Picture Video Cassette Tapes to Airlines. A motion picture studio distributes specially edited versions of its motion pictures to airlines for showing as passenger entertainment. These pictures are distributed on movie video cassettes which are made by an out-of-state laboratory. The cassettes are distributed to the airlines through two independent booking companies located in California. The airlines pick up the cassettes at the booking companies in California and return them at the end of the lease. The cassettes are shown only about 25 times because they become too "grainy" to be shown on large screens. The tapes are returned to the motion picture studio which destroys all the returned cassettes.
The motion picture studio is leasing the cassettes to the independent booking companies who in turn are leasing them to the airlines. Thus, the motion picture studio has exercised a right or power over the cassettes in California by leasing them and also destroying them at the expiration of the lease. The section 6009.1 exclusion does not apply because the cassettes were returned to California for destruction (and also returned to California between flights while in possession of the airlines). Accordingly, the motion picture studio both stored and used the cassettes in California and the charges made by the out-of-state laboratory for making the cassettes are subject to tax. 6/21/90.