Business Taxes Law Guide – Revision 2013
 

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V

585.0000 VEHICLES, VESSELS, AND AIRCRAFT—Regulation 1610

Annotation 585.0270

(a) GENERALLY

585.0270 Transfer to Living Trust. An owner of a vessel registered with the Department of Motor Vehicles, who wishes to transfer the vessel into a revocable family trust in which he is both the trustor and the trustee, is liable for use tax measured by the sales price of the vessel.

A trust is a "person" as defined by Revenue and Taxation Code section 6005. As such, the purchase of a vessel by a trust from a non-dealer is subject to use tax measured by the sales price of the property. If there is no measurable sales price, the use tax would not be due.

Where a bank is the secured lienholder and there is an outstanding loan on the vessel payable to the bank, and the owner transfers the vessel to the trust and continues to make the payments on the loan from his own funds, use tax would not apply to the transaction, because the transfer to the trust would be for no consideration. On the other hand, if the owner in addition to transferring the vessel to the trust, also transferred his checking account to the trust, and the payments on the outstanding loan were made from trust funds, use tax would be due to the extent of the amount paid by the trust for the vessel. 5/30/91.