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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
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330.0000 Leases of Tangible Personal Property—In General—Regulation 1660
Annotation 330.5120
(e) Sales and Leaseback Transactions
330.5120 Sale and Leaseback. A purchaser acquired equipment in May and June, 1992, and paid the full price of the equipment, including sales tax reimbursement, at that time. The equipment was installed by purchaser in September, 1992, and its first functional use occurred at the end of September, 1992. By letter dated December 16, 1992, the purchaser and Company X agreed to enter into an equipment lease financing. In January, 1993, the lessor and lessee attempted to finalize the transaction.
In order to qualify for the exclusion from "sale" and "purchase" one requirement is that an acquisition sale and leaseback be consummated within 90 days of the purchaser's first functional use of the property. The first functional use of the property was in September, 1992, and the sale and leaseback was not consummated until January, 1993, more than 90 days later. The December 16, 1992 letter is not considered to be "consummation of the lease." This transaction does not qualify for the exclusion from "sale" and "purchase." (Section 6010.5.) 6/11/93.