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Stockton Kenworth, Inc. v. State Board of Equalization … (1984)

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Driving Trucks Out of State Is Not a Taxable Use of Trucks in State

Taxpayer purchased trucks in California for lease to out-of-state carriers, and drove the unloaded trucks out of state, where the leases commenced. The Board imposed use tax on the purchases, and taxpayer filed suit for refund. The trial court entered judgment in favor of the taxpayer.

The court of appeal affirmed, holding that under Revenue and Taxation Code section 6009.1, no use tax can be imposed where the sole use of the property in the state is the delivery of the property to an out-of-state lessee. The Board's Regulation 1620(b)(5), which required that the property must be passively transported out of state, not transported under its own power, was an unwarranted abridgement of the exemption created in favor of taxpayers who transport property outside the state for use thereafter solely outside the state. Stockton Kenworth, Inc. v. State Board of Equalization (1984) 157 Cal.App.3d 334.