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BTLG Table of Contents > Sales and Use Tax Annotations > L > 330.0000 Leases Of Tangible Personal Property—In General > Annotation 330.5270

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

Annotation 330.5270

(e) Sales and Leaseback Transactions

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330.5270 Title to Property vs. Security for Loan. A taxpayer enters into transactions in which an owner of real property purports to sell both real property and personal property contained therein to the taxpayer and to lease it back from the taxpayer. The parties contend, however, that neither sales tax nor use tax applies because the transaction is really a financing transaction with the property serving as security for the loan.

If the taxpayer did not obtain ownership of the property such that the transaction was a financing transaction, the taxpayer would be engaged in business as a personal property broker under section 22009 of the Financial Code and would be required to hold a license issued by the Corporation Commissioner. If the taxpayer does not hold a license as a Personal Property Broker, it should be assumed that the taxpayer received title to the property, and the transaction is a sale and leaseback and not a financing transaction. 11/28/66.