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Business Taxes Law Guide—Revision 2024
Sales and Use Tax Annotations
A B C D E F G H I J L M N O P R S T U V W X
L
330.0000 Leases of Tangible Personal Property—In General—Regulation 1660
Annotation 330.2573
(a) In General
330.2573 Partnership Interests. A and B were equal partners in a business. The partnership purchased equipment tax-paid for use in the business. A withdrew from the partnership and sold his interest to C, D, E and F. There was no written agreement providing that this change would not cause a dissolution of the original partnership. Therefore, the partnership of B and C, D, E and F is regarded as a new partnership.
Simultaneously, B and C, D, E and F formed a corporation. They transferred all assets of the new partnership other than equipment to the new corporation solely in exchange for first issue stock. The new partnership leased the equipment to the corporation.
Tax applies to the rental receipts. The equipment does not retain its tax-paid status in the hands of the new partnership. There is no method for placing the equipment in tax-paid status because it was transferred to the new partnership by C, D, E and F solely in exchange for ownership interests in the new partnership. 3/11/75.