Laws, Regulations & Annotations

Business Taxes Law Guide – Revision 2018

Sales and Use Tax Annotations

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580.0000 VEHICLES

Annotation 580.0228


580.0228 Lease Buy-Out and Immediate Resale. A lessee exercised his option and purchased a vehicle which he was leasing and received title on March 25, 1994. When he bought the vehicle, the lease was at midterm. The lessee sold the vehicle to an out-of-state buyer the same day. The vehicle was not used between March 25, 1994, and March 26, 1994. The out-of-state buyer had a trucking company pick up the vehicle at the lessee's house on March 26, 1994, and deliver it to the train station for shipment. The lessee notified the California Department of Motor Vehicles of the sale on March 30, 1994, by submitting a signed "release of liability" form.

Based on the information provided, if the contract was a true lease, the lessee's purchase of the vehicle per the lease buy-out was a nontaxable purchase for resale as it was immediately resold without any use being made of the vehicle in California. 6/10/94.