Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2018

Sales and Use Tax Annotations

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495.0000 SALE

Annotation 495.0292


495.0292 Grower of Trees Has Option to Repurchase. A tree grower has an agreement to grow, within one year, 100 trees for a consideration of $5000 from the purchasers. The trees are grown in containers. At the purchaser's option, the grower also agrees to repurchase, after nine months, any of the trees at a price of $75 per tree. The contract also specifies that the purchaser retains title to the trees during the contract period and may take possession of these trees by giving seven days notice and physically removing them from the nursery. The purchasers are not in the business of selling, growing or using trees. They do not have seller's permits and none have requested possession of the trees.

The growing contracts are contracts to sell goods and a sale takes place when the trees are identified to the contract. The contracts pass clear title to the trees to the purchaser for consideration. A sale has occurred under section 6006(a) and, unless the transaction is otherwise exempt under the law, it is subject to tax. In some instances, although consideration was received, the trees were not grown. If the property (trees) sold does not exist, then a sale of tangible personal property has not occurred and corresponding moneys received by the grower are not subject to tax. 5/29/84; 7/10/96.