Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2018

Sales and Use Tax Annotations

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Annotation 330.2560


330.2560 Out-of-State Use of Leased Equipment. An out-of-state company has several jobs offshore of California. The company is a lessee of tangible personal property (not MTE) for use in waters outside California. The leases are continuing sales and purchases.

If the leased property is not situated in California during the lease term, no California use tax will be due on the rental payments. If the property is inside California during any portion of the lease term, use tax will apply for the period of time the property is inside the state unless the section 6009.1 exclusion applies. For example, if the company was to store the property in California for the purpose of subsequently transporting it to waters outside California for use solely outside this state, such storage would come within the section 6009.1 exclusion, and the company would not owe California use tax on such storage. However, the company will owe use tax if it makes any use of the property in California other than the storage or other exercise of a right or power over the property for the purpose of shipment outside this state for use solely outside this state. 1/3/96.