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Business Taxes Law Guide—Revision 2024
Sales and Use Tax Annotations
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325.0000 Interstate and Foreign Commerce—Regulation 1620
Annotation 325.0004
(a) In General—Shipments Into California from Points Outside State
325.0004 Aircraft Refurbishing. An out-of-state company purchased a used commercial aircraft and took delivery outside California with title and possession transferring out of state. The first functional use of the aircraft took place shortly after the purchase and consisted of transporting representatives of the purchaser to another location outside California. The aircraft was subsequently flown to California for refurbishing, which included the installation of a new interior, to modify the aircraft for noncommercial use. The aircraft entered California within 90 days from the date of purchase. The refurbishing of the aircraft interior in California took more than six months to complete. When the refurbishing was complete, the aircraft was delivered to the purchaser outside California. Thereafter, the aircraft was used non-commercially, solely outside the state.
The installation of an interior in an aircraft is considered to be an act of incorporating tangible personal property into other tangible personal property. Accordingly, installing the interior does not constitute "storage" or "use" of the aircraft when the aircraft is to be immediately transported outside California and thereafter used solely outside this state. If the sole utilization of the aircraft in California is that of installing a new interior, the use tax is not applicable pursuant to Regulation 1620(b)(6). The transportation of the aircraft into California under its own power is also excluded from the term "use." 5/7/86. (Am. 2004–2).