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Business Taxes Law Guide—Revision 2024
Sales And Use Tax Law
Revenue and Taxation Code
Division 2. Other Taxes
Part 1. Sales and Use Taxes
Chapter 1. General Provisions and Definitions
Section 6006.5
6006.5. "Occasional sale." "Occasional sale" includes all of the following:
(a) A sale of property not held or used by a seller in the course of activities for which he or she is required to hold a seller's permit or permits or would be required to hold a seller's permit or permits if the activities were conducted in this state, provided the sale is not one of a series of sales sufficient in number, scope, and character to constitute an activity for which he or she is required to hold a seller's permit or would be required to hold a seller's permit if the activity were conducted in this state.
(b) Any transfer of all or substantially all the property held or used by a person in the course of those activities when after the transfer the real or ultimate ownership of the property is substantially similar to that which existed before the transfer. For the purposes of this section, stockholders, bondholders, partners, or other persons holding an ownership interest in a corporation or other entity are regarded as having the "real or ultimate ownership" of the property of the corporation or other entity.
(c) A sale of property, other than hay, by a producer of hay, provided that the sale is not one of a series of sales sufficient in number, scope, or character to constitute an activity for which the producer would be required to hold a seller's permit if the producer were not also selling hay.
History—Added by Stats. 1947, p. 2030, in effect June 19, 1947. Stats. 1969, p. 998, in effect November 10, 1969, substituted "activities" for "an activity" in (a) and (b) and added "or permits or would be required to hold a seller's permit or permits if the activities were conducted in this state" and "or would be required to hold a seller's permit if the activity were conducted in this state" to (a). Stats. 1985, Ch. 1083, effective October 1, 1985, added "or she" after "he" and substituted "that the" for "such" in subdivision (a), substituted "the" and "those" for "such" throughout subdivision (b), and added subdivision (c). Stats. 1994, Ch. 903, in effect January 1, 1995, added ", other than hay," after "property" and deleted ", other than hay," after "producer of hay," in subdivision (c).
Liquidation sale.—Where there were a number of plant equipment sales prior to the termination of a business, a sale of plant equipment thereafter is one of the same series of sales and not an occasional sale. Sutter Packing Co. v. State Board of Equalization (1956) 139 Cal.App.2d 889.
Division of business.—An exchange of assets between two affiliated corporations to effect a territorial division of a business is a retail sale, and such sale and 19 other sales of similar kinds of used equipment to other persons are a series of sales sufficient in number, scope and character to constitute an activity requiring the holding of a seller's permit. Pacific Pipeline Construction Co. v. State Board of Equalization (1958) 49 Cal.2d 729.
Sale of a business not an occasional sale.—A manufacturer who customarily made sales at retail and held a seller's permit, is subject to the retail sales tax on the sale of all capital assets used in operating the business. Sale of the business assets in such a case is not an occasional sale. Each sale in question was one of a series of sales sufficient in number, scope and character to constitute an activity requiring the holding of a seller's permit. U.S. Industries, Inc. v. State Board of Equalization (1962) 198 Cal.App.2d 775.
Sale of a businessoccasional sale.—A manufacturer who had made sales for resale but no retail sales and whose product was not suitable for retail sale was not a "seller" and the sale of the manufacturers business assets was, therefore, an occasional sale. Glass-Tite Industries, Inc. v. State Board of Equalization (1968) 266 Cal.App.2d 691 (this case was overturned by a 1983 amendment to Section 6014). A manufacturer who makes no retail sales but whose product is suitable for retail sale is a "seller" and sale of the manufacturers business assets was not an occasional sale. Davis Wire Corp. v. State Board of Equalization (1976) 17 Cal.3d 761.
Sale of hotel assets.—The sale by a hotel of all its furniture, fixtures, and other assets was not an "occasional sale" where the hotel operated a restaurant, bar, and smoke shop through which sales requiring the holding of a seller's permit were made and where the hotel had made numerous sales of property of the type disposed of in the final sale during the months prior to that sale. Hotel Del Coronado Corp. v. State Board of Equalization (1971) 15 Cal.App.3d 612.
Sale of Segment of Business Not an Occasional Sale.—An exchange of assets and name of a wholly owned subsidiary for common stock of, but not a controlling interest in, the transferees parent, was subject to the sales tax even though the sale of plaintiffs subsidiarys business to the transferees subsidiary business could have been effected by a tax free statutory merger. Simplicity Pattern Company v. State Board of Equalization (1980) 27 Cal.3d 900.
Hospital equipment.—Sale of hospital equipment used for medical and nursing services is an exempt occasional sale, even though hospitals held seller's permit for other activities. Board regulation applying unitary business concept conflicts with section 6006.5(a). Ontario Community Foundation, Inc. v. State Board of Equalization (1984) 35 Cal.3d 811.
Note.—See Sections 6275, 6281 and 6367 regarding vehicles, vessels and aircraft. Producer of Crude Oil is a Seller.A "seller" includes a producer of crude oil which made no retail sales of the crude oil. The sale of the producers assets was not an exempt occasional sale. Santa Fe Energy Co. v. State Board of Equalization (1984) 160 Cal.App.3d 176.
Series of sales includes sales by all divisions of seller.—Where seller sold the assets of a service division, all sales by all divisions may be considered in determining whether a series of sales required seller to hold seller's permit. Chemed Corp. v. State Board of Equalization (1987) 192 Cal.App.3d 967.
Assumption of liabilities by a commencing partnership.—A taxable sale occurs when a commencing partnership assumes the liabilities of its partners in exchange for tangible personal property. Industrial Asphalt, Inc. v. State Board of Equalization (1992) 5 Cal.App.4th 1237.