Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2018

Sales and Use Tax Annotations

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Annotation 515.1412


515.1412 Use of Property on a Development Program. A taxpayer purchased property ex-tax under resale certificates for use on a program to develop a new printing system. The customer was to pay a stated amount for the system if the development was successful. The customer found the system to be unacceptable and returned it to the taxpayer. The customer was not obligated to pay for the system and did not. The taxpayer ultimately scrapped the system and wrote off the development costs.

The taxpayer is liable for use tax on the cost of the material used in the development program. The property was not utilized solely for incorporation into property which was resold in the regular course of business. The property was used experimentally to determine the feasibility of the system. 1/17/75.