Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2014
 

Sales and Use Tax Annotations


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395.0000 OCCASIONAL SALES—SALE OF A BUSINESS—BUSINESS REORGANIZATION—Regulation 1595

Annotation 395.0007

(a) IN GENERAL

395.0007 Asset Sales. An asset sale is structured such that the seller creates a new limited liability company (LLC) and transfers the assets into the commencing entity in exchange for an interest in the LLC that is concurrently transferred to the purchaser for cash. The sale is contingent on the finalization and concurrent closing of several transaction documents relating to various aspects of the business operations, e.g., a Supply Agreement, a Services Agreement, an Employee Benefits Agreement, etc.

The asset sale described consists of several contracts and agreements that relate to the same matter, are between the same parties, and are made as parts of substantially one transaction. This type of transaction is considered as a single integrated transaction for the transfer of tangible personal property in exchange for cash. (See Civ. Code §§ 1436 and 1642.) It does not qualify as a non-taxable transfer to a commencing entity under Regulation 1595(b)(4) because the transfer is not solely for an interest in the commencing entity. 04/26/02.