Laws, Regulations & Annotations
Business Taxes Law Guide – Revision 2017
Sales and Use Tax Annotations
(a) IN GENERAL—DEFINITION
495.0450 Sale of Stores. Simultaneous with the purchase of all the shares of stock of Company C, Company A entered into an agreement to sell ten of the individual stores of Company C to Company B. Company B is a subsidiary created for the purpose of establishing a group of franchised stores. The ten stores are individually transferred to a franchisee as rapidly as a franchisee can be obtained. Company B operates the stores until the franchisees takes over the operation. Company B contends that it purchases the property for resale and in fact resells the property to its franchisees. The stores are kept in operation prior to the sale to the franchise only so that the stores can be sold as operating businesses. Tax is paid on the sale of the furniture and store fixtures to the franchisees.
Since Company B operates the stores prior to reselling them, the sale to Company B is a retail sale. It is immaterial that Company B's operation of the stores is solely for the short interim period before resale and only for the purpose of being able to sell operating business. It is also immaterial that Company B pays tax on the subsequent sale of the stores. Tax applies to each retail sale of tangible personal property. 3/2/84.