Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2013
 

Sales and Use Tax Annotations


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347.0000 MANUFACTURING EQUIPMENT—Regulation 1525.2

Annotation 347.0250

347.0250 Corporate Division Opening New Plant. A taxpayer is a corporation who has been manufacturing floppy disks and audio tapes in California for several years. In early 1995, the taxpayer decided to open a new CD ROM manufacturing operation at another location in California. The new CD ROM facility maintains separate books and records and operates as a separate operating division under the corporate umbrella.

Section 6377 makes a distinction between persons who are or were previously engaged in a trade or business inside the state and those that are not for purposes of determining "qualified person" status. A new trade or business is generally one which a person (or any related person) has not engaged in within the preceding 36 months inside California or which is classified in a different Standard Industrial Classification Manual (SIC manual) code division than the person's (or any related person's) current or prior trade or business activities in this state.

The taxpayer has been engaged in manufacturing activities inside California within the previous 36 months; these activities consist of manufacturing floppy disks and audio tapes described in the SIC manual under code 3695 as "Magnetic and Optical Recording Media." The new CD ROM operation is a part of the same corporation that has been engaged in manufacturing operations covered by the same divisions of the SIC manual. As such, the taxpayer's new CD ROM operation does not qualify as a new trade or business for purposes of the partial sales and use tax exemption. 2/6/96.