Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2018

Sales and Use Tax Annotations

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Annotation 395.0078


395.0078 Summary of Rules on Occasional Sales.

(1) Sales of vehicles, vessels, and aircraft are not exempt occasional sales under section 6367 of the Revenue and Taxation Code.

(2) The person making a sale cannot be a seller who holds or should hold a seller's permit with respect to the property being sold.

(3) If a business has an activity which requires a permit and a completely separate service activity, only the sale of the assets used in the activity requiring a permit is taxable.

(4) A person who makes 3 or more sales in a 12 month period is required to hold a seller's permit. This is interpreted as including three sales of $100 or more or many sales of less than $100. However, a person who is in the business of selling tangible personal property is subject to tax even though only one sale is made.

(5) The transfer of assets to a commencing corporation solely in exchange for first issue stock is not taxable. As long as the corporation has not actually issued stock or conducted business, it is a commencing entity.

(6) When an entity distributes its assets as a complete liquidation ratably to its owners in the stated percentage as their ownership interests, the transfer is not taxable unless there is some measurable consideration. The acquisition of stock for purposes of cancellation does not have a value for sales and use tax purposes.

(7) Even though a liquidation of assets may not be a taxable transfer, it may be a taxable use of the transferred property. For example, if the property is resale inventory, the withdrawal for other than resale is a use.

(8) Contributions to capital, statutory mergers, and sales of capital stock are not taxable. 3/13/95.