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Business Taxes Law Guide—Revision 2024
Sales and Use Tax Annotations
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330.0000 Leases of Tangible Personal Property—In General—Regulation 1660
Annotation 330.2095
(a) In General
330.2095 Commencing Out-of-State. Unless California sales or use tax has been paid upon the purchase price of the leased property, the possession of leased property in this state by a lessee is a continuing purchase for use of that property while in this state. If a lease involving an out-of-state lessor commences at an out-of-state location, the lease proceeds are subject to use tax when the property enters California. This applies unless the lessor exercised the option specified in Regulation 1660(c)(8), which is available only if the property was purchased for use in California. If the property was purchased for use in this state, and the lessor has paid a sales or use tax to another state and elects to measure the California liability by the purchase price rather than rental receipts, a credit may be allowed for the tax paid to the other state. If the property was used in a California county having a total tax rate equal to or less than the other state's tax rate at the time of purchase, the election is deemed to be automatic and no tax is due on rental payments. 10/14/93.