Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2013
 

Sales and Use Tax Annotations


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

Annotation 395.1768

(h) OWNERSHIP "SUBSTANTIALLY SIMILAR"—"REAL OR ULTIMATE" OWNERSHIP

395.1768 Transfer Between Related Entities. A and B together with Corporation C each own one-third of a Limited Liability company (LLC). The same three own a one-third interest in another Company D except that A and B own their interests through a different corporation (Holding). Company D will form a wholly-owned subsidiary (NEWCO). NEWCO will purchase all of the assets of the LLC.

In the final analysis, A, B and C hold a one-third interest in the LLC and each will hold a one-third interest in NEWCO. Since the tracing of ownership through multiple levels of ownership [e.g., the "grandparent" of the sellers and the "great grandparent" (Holding) of the purchaser] leads to the same person, for purposes of the occasional sale definition in section 6006.5(b) the ownership will be the same before and after the transfer even though a tracing only through the "grandparent" reveals no common ownership. 4/17/97.