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Business Taxes Law Guide—Revision 2024
Sales and Use Tax Annotations
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100.0000 Advertising Agencies, Commercial Artists and Designers—Regulation 1540
Annotation 100.0161
(c) Preliminary and Finished Art
100.0161 Preliminary Art. A company issues separate purchase commitments for preliminary art and finished art. The company proposes an amendment to the "Additional Terms and Conditions" of the purchase commitment. The proposed amendment states that the vendor agrees that all the materials prepared pursuant hereto shall be owned exclusively and in perpetuity by the company, and vendor hereby irrevocably assigns to the company any and all of its right, title and interest, including copyright, prior to any use by vendor in and to such materials. Exception: the above does not apply to conceptual/creative art (herein referred to as 'Preliminary art'). …"
The amendment to terms and conditions is necessary for the vendor of the art to comply with the preliminary art provisions of Regulation 1540. Other criteria must also be met, i.e., the transfer of possession roughs, visualizations or other forms of preliminary art can only be temporary for review purposes only, before the vendor may exclude the charge for preliminary art from the taxable charge for final art. 11/4/92.