Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2018

Sales and Use Tax Annotations

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495.0000 SALE

Annotation 495.0735


495.0735 Sale of Equipment—Oil Well Operating Agreement. Under the provisions of an oil well operating agreement, each member holds a pro-rata share of title to the equipment acquired. The co-owners operating agreement does not create a "person" within the meaning of section 6005. Since each member is a co-owner, a transfer of property (to the jobsite) by one member which becomes co-owned by the other members gives rise to a "sale". Tax applies to the percentage of the sale price which relates to the property interest of the other co-owners. For example, if the transferor holds a 25% interest in the "operating agreement equipment" 75% of the transfer price is subject to tax.

The fact that the transferor is the operator of the site and holds a security interest in the property transferred does not affect this conclusion. 12/6/90.