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BTLG Table of Contents > Sales and Use Tax Annotations > L > 330.0000 Leases Of Tangible Personal Property—In General > Annotation 330.2441

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330.0000 Leases of Tangible Personal Property—In General—Regulation 1660

Annotation 330.2441

(a) In General

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330.2441 Occasional Sale—Property Acquired Under. Company X manufactures equipment and transfers it to Company Y, a commencing corporation, solely in exchange for first issue stock. Y leases the equipment to Company Z, a related corporation. Y collects use tax from Z on the rental receipts. At the termination of the lease to Z, Y uses the equipment itself. Because Y did not acquire the property by purchase, no tax is due on the use of the equipment by Y.

The initial transfer by X for first issue stock of Y results in use tax due by X on the purchase price of the equipment component parts which had been acquired for resale. The transfer of property in exchange for first issue stock is considered a use. 4/26/95.