Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2018

Sales and Use Tax Annotations

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475.0000 RESALE CERTIFICATES—Regulation 1668

Annotation 475.0069

475.0069 Holding Property for Appreciation in Value. Paintings were purchased with the hope of realizing a profit by their eventual sale rather than with the intent of making them part of a permanent collection. The paintings were of doubtful origin and did not have currency in the market. The purchaser hoped to make them profitable and salable in the future by collecting attributions for them which would establish an increased value. Thus, the paintings could not be considered part of the purchaser's stock in trade held for resale in a regular course of a business. In arriving at this conclusion, it was noted that the purchaser never made three sales during any twelve-month period. In fact, no sales were made during this period. Thus, resales of paintings were not part of the regular course of business during the audit period.

Accordingly, it was concluded that the paintings were purchased for a purpose other than, or in addition to, a resale in the regular course of business. While there is nothing illegitimate in holding property with the hope that it increases in salable value, purchase of it does not qualify as a nontaxable purchase for resale. 4/18/69.