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 325.0884

(c) Shipments from California to Points Outside State

(4) Delayed Shipment; Use Prior to Shipment; "Bailee Clauses"

325.0884 Delayed Shipment. A firm sells a horse for shipment out of state. Responsibility for board and expenses rests with the buyer upon execution of the sales agreement. Under the installment contract, title and registration remains with the seller until the final payment is made which may be as long as five years after the sale. The horse may be insured by the buyer or seller but the buyer usually is required to maintain insurance equal to the balance due on the contract.

On occasion the delivery to the buyer may be delayed because (1) the horse is in foal, or (2) until the buyer arranges to rendezvous with the seller at an out-of-state exhibition, or (3) for some other economic or practical reason. During the delay, the horse is not bred or used for any business purpose. Ultimately the horse is shipped out of state pursuant to the contract of sale.

The sale is exempt from tax pursuant to section 6396. The delay in delivery for the reasons described above will not cause the transaction to lose its exempt status. 8/1/84.