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 395.1796

(i) TRANSFERS AND CONTRIBUTIONS TO NEW CORPORATION OR PARTNERSHIP

395.1796 Assumption of Loan Obligation. Two individuals who were members of a partnership purchased an airplane which they owned equally in their own capacities. They paid part cash and the balance of the purchase price was a loan obtained in their individual capacities. After using the airplane for about a year, the owners transferred the ownership of the airplane to a new corporation. The loan on the airplane was not transferred to the corporation. It remained in the names of the individuals. However, the payments on the loan were made by the corporation.

Even though the loan obligation on the airplane was not formally transferred to the corporation, the corporation nevertheless assumed the loan obligation by making the monthly payments on the loan. This constitutes consideration for the transfer of the title to the airplane and, thus, the amount of the loan obligation assumed is the measure of the tax due. 6/23/89.