Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2018

Sales and Use Tax Annotations

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See also Court-Ordered Sales, Foreclosures and Repossessions.

365.0020 Mortgage. Civil Code section 2924 providing that a transfer of property given only to secure an act is a mortgage applies to personal property as well as realty. A mortgage gives the mortgagee only a lien interest and is insufficient to constitute a sale under section 6006. Accordingly, when ataxpayer contracted to transfer property in tools and dies until an advance of money was repaid, and the creditor was to return title and ownership upon repayment by bill of sale, the transaction constituted a mortgage not subject to tax. 10/29/64.

365.0040 Reacquisition of Business by Mortgagee. Where tangible personal property is sold under a purchase money mortgage and the purchaser-mortgagor is in default and the seller-mortgagee reacquires the property, and the only consideration received by the mortgagor is cancellation of the unpaid balance of the mortgage note, the transfer to the mortgagee does not constitute a taxable sale. However, where tangible personal property is subjected to a nonpurchase money mortgage and the mortgagor defaults and transfers his beneficial interest and title in the mortgaged property to the mortgagee in consideration of cancellation of the mortgagor's obligation, the transfer of title to the mortgagee constitutes a taxable retail sale. 6/27/67.

365.0045 Release of Taxpayer's Records to a Trustee in Bankruptcy. Trustee in bankruptcy is the representative of the bankruptcy estate. Consequently, the Board may release any taxpayer records that are relevant to the bankruptcy estate to the trustee in bankruptcy without either a power of attorney or a court order. Where the corporation no longer exists, the trustee in bankruptcy may have access to any Board records in the taxpayer's file. 9/17/97. (M98–3).

365.0060 Transfer to Mortgagee. Where mortgagors of chattels default in payment, and by agreement in lieu of foreclosure, the chattels become the property of the mortgagee, and the chattel mortgage and original notes are canceled, a taxable sale of the chattels occurs. The measure of the tax is the amount by which the parties agree the indebtedness is reduced. 3/16/55.