Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2018

Sales and Use Tax Annotations

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495.0000 SALE

Annotation 495.0125


495.0125 Commodity Exchange—Aluminum Storage. The function of a commodity warehouse for storage of aluminum is for the benefit of both the producer and the fabricator. The warehouse operator issues a "warrant" to the producer as evidence of title. These warrants are then sold and subsequently traded many times on the Commodity Exchange until a fabricator claims the unit of aluminum with his warrant.

Assuming the "warrants" are negotiable instruments of title as described in section 71004 of the Uniform Commercial Code and that the specific aluminum to which they relate is not identified until delivery to the fabricator, the transfers of the warrants are not subject to tax. For purposes of the Sales and Use Tax Law, a "sale" between the producer and fabricator would occur upon delivery of the aluminum to the fabricator. Unless the fabricator furnished the producer with a valid resale certificate, the producer would be liable for tax based on the gross receipts from the sale upon delivery of the aluminum. 3/5/84.