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BTLG Table of Contents > Sales and Use Tax Annotations > L > 330.0000 Leases Of Tangible Personal Property—In General > Annotation 330.5300

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

Annotation 330.5300

(e) Sales and Leaseback Transactions

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330.5300 Use of Property by Lessor. A lessee failed to exercise its purchase option in the lease portion of a transaction qualifying as an "acquisition sale and leaseback" under section 6010.65. The lessor therefore retained ownership of the property. Since the lessor had acquired title to the property in a transaction not subject to sales or use tax (the acquisition sale and leaseback), its own subsequent use of the property is not subject to tax. However, any subsequent lease of the property by the lessor would be a continuing sale and purchase because the lessor would not have timely paid sales tax reimbursement or use tax on purchase price (and would have no election to do so). The subsequent leases would be subject to tax measured by rentals payable. 2/21/92.