Laws, Regulations & Annotations
Business Taxes Law Guide – Revision 2013
Sales and Use Tax Annotations
395.0000 OCCASIONAL SALES—SALE OF A BUSINESS—BUSINESS REORGANIZATION—Regulation 1595
(b) ACTIVITIES REQUIRING PERMIT—PROPERTY HELD OR USED IN
395.0372 Rented Equipment. A corporation was engaged in the business of selling "metal specialties." Most of its sales were to the United States Government or sales in interstate commerce. It held a seller's permit. The corporation has no machine shop, does not fabricate prototype or parts, has no machinists, and has no equipment for doing metal work. It does test and verify what it has redesigned and, on occasion, it assembles a given part. Most of what it sold was produced by subcontractors.
The corporation contracted with a firm to do some manufacturing as a subcontractor. The subcontracting firm could not finance a lathe which was necessary to construct the part. The corporation purchased the lathe tax paid, rented it to the subcontractor, and depreciated the lathe for income tax purposes. In the course of events, the lathe later was sold to another firm. The rental of the lathe was related to the business of the corporation and was "held or used by the seller in the course of an activity or activities for which a seller's permit was required." The lease of lathe was integrated with the corporation's principal business. As such, it was used in an activity which required holding a seller's permit. The sale of the lathe is not an occasional sale under section 6006.5(a). 1/6/87.