Laws, Regulations and Annotations


Business Taxes Law Guide—Revision 2024

Sales and Use Tax Annotations

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325.0000 Interstate and Foreign Commerce—Regulation 1620

Annotation 325.0698.200

(c) Shipments from California to Points Outside State

(3) Installation in State Generally

325.0698.200 Delivery of Aircraft. A firm engaged in the maintenance, modification, and servicing of aircraft entered into an agreement with a leasing company with no offices in California to modify an aircraft for the leasing company. The work was to be done in California but the firm was required to deliver the aircraft outside California and the leasing company certified that the aircraft modification was purchased for use outside California. The aircraft was to be delivered by December 20, 1979. Completion of the work was delayed and, on December 20, 1980, agents of the leasing company surreptitiously removed the aircraft from the firm's facilities and flew it to New York. After an arbitration decision issued May 6, 1982, the aircraft was returned by the leasing company to the firm in California on July 23, 1982. A final checkout and test flight was conducted on that date and the aircraft was delivered to the leasing company outside this state on the next day. The firm believes that the taking of the aircraft by the leasing company's agents did not constitute delivery by the firm because the transfer was not voluntary, that delivery actually took place on July 24, 1982, outside of California, and therefore, that the sale was a nontaxable sale in interstate commerce.

The concept of "delivery" comprises elements of participation, agreement, or voluntary action and could also include permissiveness if not action. The taking of the aircraft by the leasing company's agents involved none of these elements. Therefore, the company did not deliver the airplane to the leasing company in California on December 20, 1980, but did deliver the aircraft out of state on July 24, 1982. The sale qualifies as a nontaxable sale in interstate commerce. 8/22/83.