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
330.2441 Occasional Sale—Property Acquired Under. Company X manufactures equipment and transfers it to Company Y, a commencing corporation, solely in exchange for first issue stock. Y leases the equipment to Company Z, a related corporation. Y collects use tax from Z on the rental receipts. At the termination of the lease to Z, Y uses the equipment itself. Because Y did not acquire the property by purchase, no tax is due on the use of the equipment by Y.
The initial transfer by X for first issue stock of Y results in use tax due by X on the purchase price of the equipment component parts which had been acquired for resale. The transfer of property in exchange for first issue stock is considered a use. 4/26/95.