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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 330.2299.125
(a) In General
330.2299.125 Lease of Convention Exhibit Component Systems. A California lessor leases an exhibit to a California company for a show in Dallas, Texas. The lessor ships the exhibits by common carrier F.O.B. the loading dock in California, and the rental amount is paid in full before the lessee receives possession. After receipt of the exhibit, the lessee ships it to Texas for use for the entire term of the lease, after which it is returned to California for storage.
No tax will apply to lease payments attributable to use of the property outside of California. If the property is used in California during any portion of the lease term, the lease payments should be prorated between in-state use and out-of-state use. However, if the property is not functionally used in California, then all of the lease payments are nontaxable. The retailer may overcome the presumption contained in section 6247 by obtaining a written statement from the purchaser that the property was purchased for use out of state. This statement, taken in good faith, will relieve the retailer, but has no effect on any liability of the purchaser. 5/24/93.