Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2018

Sales and Use Tax Annotations

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375.0000 MOTION PICTURES—Regulation 1529

Annotation 375.1100


(1) Generally

375.1100 Transfer of Qualified Motion Picture. Company A purchases a qualified motion picture in California together with the right to distribute it. The qualified motion picture had been broadcast in theatres within the U.S. by the producer of the picture. Company A transfers the right to broadcast the picture to Company B, which adds Spanish subtitles to the picture for broadcasting in the Spanish language. Company B plans to distribute the picture with subtitles to local broadcasters.

The transfer from the producer to Company A would be a sale of tangible personal property. The "general audience" referred to in section 6010.6 is the general audience for whom the picture was originally produced. The charges for adding subtitles are nontaxable as charges for "qualified production services". The producers sale would be subject to sales tax as a retail sale unless Company A transfers the picture to Company B prior to making any use of the picture. In this case, the sale from the producer to A is a sale for resale and A's sale to B is a taxable retail sale.

If the producer transfers the right to broadcast the picture to Company A with the limitation that Company A add Spanish subtitles and broadcast only to Spanish speaking audiences, the transfer would also be subject to sales tax. The existence of the limitation would not make any difference.

If Company A transfers the right to broadcast the subtitled picture to distributors or broadcasters in Spain, the transfer of the film in California is subject to sales tax. The application of tax remains the same regardless of limitations imposed by the producer, or whether Company A or B transfers the right to broadcast the picture in Spain or Japan. 4/19/93.