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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 330.5255
(e) Sales and Leaseback Transactions
330.5255 Nuclear Fuel. A utility company purchases uranium ore from independent mining companies and acquires title to the ore. The utility company then contracts with various other companies to have the ore processed into nuclear fuel. The utility company retains title to the ore throughout the various processing stages, until such time as the ore becomes "nuclear fuel." After various processing stages were completed and the ore became "nuclear fuel," the "nuclear fuel" was sold to the processing company and leased back. Under the terms of the lease, the utility company will reacquire title to the fuel at the end of the lease term, to the extent such property remains in existence, without paying any consideration other than that already due under the lease.
The fact that the property leased is consumed during the term of the lease does not preclude a sale and leaseback transaction from qualifying as a nontaxable financing transaction under Regulation 1660(a)(3) provided that all the other requirements are satisfied. 12/23/85.