Laws, Regulations & Annotations
Business Taxes Law Guide – Revision 2015
Sales and Use Tax Annotations
420.0000 PHOTOGRAPHERS, PHOTOSTAT PRODUCERS, PHOTO FINISHERS AND X-RAY LABORATORIES—Regulation 1528
(b) PROCESSING, RETOUCHING, ETC.
420.0345 Chemical Solutions. The following chemicals introduced into the nine bath system of negative development of microfiche (termed the full reversal process) may be purchased for resale, since the primary purpose is incorporation into the finished product:
(1) FR AUTOCOM 1st developer
(2) FR AUTOCOM 2nd developer
(3) FR AUTOCOM fixer
Insufficient information was supplied to establish that any of the balance of the chemicals used in the process, were purchased for the primary purpose of incorporation into the microfiche. The processor is not regarded as having made a taxable use of property simply because the property performs some processing in its course of its incorporation into the final product. On the other hand, property used in the course of processing is not regarded as having been resold without use simply because some portion of it remains incidentally as part of the final product (American Distilling Co. v. State Board of Equalization (1942), 55 Cal.App.2d 799). It is the taxpayer's responsibility to establish that the primary purpose of property, used in the manufacturing process, was for incorporation into the finished article in order to show that the property can be purchased without tax "for resale." (See Burroughs Corp. v. State Board of Equalization (1984), 153 Cal.App.3d 1152.) 1/24/90.