Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2018

Sales and Use Tax Annotations

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Annotation 395.0079


395.0079 Transfer of Assets and Computer Programs. A firm enters into an agreement to establish a business alliance. Among other items, it transfers a 60% undivided interest in all tangible personal property related to a specific portion of its business to the other member of the alliance. It also transfers a 60% undivided interest in all proprietary software which is used in the same portion of the business.

The software is transferred by electronic transmission. Approximately one year later, the firm transfers a mainframe computer which contains some of the software transferred earlier.

The transfer of assets contemplated by the alliance agreement is a retail sale. The agreement does not contemplate that the assets will be regarded as partnership assets. The transfer of the proprietary software by means of electronic transmission is not subject to tax as explained in Regulation 1502(f)(1)(D). The measure of any tax due on the subsequent transfer of the mainframe computer does not include any value attributable to proprietary software contained in related storage media to the extent the software was transferred electronically a year earlier. 10/29/93.