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
(i) TRANSFERS AND CONTRIBUTIONS TO NEW CORPORATION OR PARTNERSHIP
395.2046 Transfer of Vessel in Exchange for Stock. A taxpayer is the sole shareholder of a Guernsey corporation. The corporation's sole asset is a vessel, currently under British registry. There is no debt associated with this vessel. The taxpayer proposes to form a new Delaware Corporation of which he will be the sole shareholder. The Guernsey Corporation will then assign title to the vessel for no consideration to the Delaware Corporation. The Delaware Corporation's only asset will be the vessel. As part of this proposed transfer, the vessel's registry will be changed to California. The vessel has, since its purchase several years ago, been located outside the United States in Europe and the Caribbean. After the transfer, the vessel will come to California.
Since the stock issued by the Delaware Corporation is first issue stock and that the assignment of the vessel from the Guernsey Corporation to the Delaware Corporation will be solely in exchange for the first issue stock of the commencing corporation, with no consideration, the transfer is not a purchase subject to use tax. 06/17/96.